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title: "House Oversight: Estate Documents (Nov 12) (HOUSE_OVERSIGHT_014783)"
source: "House Oversight: Estate Documents (Nov 12)"
sourceUrl: "https://www.justice.gov/epstein"
date: "2026-01-01"
category: "House Oversight"
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Options Risk Statement
Potential Risk at Expiry & Options Limited Duration Risk
Unlike owning or shorting a stock, employing any listed options strategy is by definition
governed by a finite duration. The most severe risks associated with general options
trading are total loss of capital invested and delivery/assignment risk, all of which can
occur in a short period.
Investor suitability
The use of standardized options and other related derivatives instruments are
considered unsuitable for many investors. Investors considering such strategies are
encouraged to become familiar with the "Characteristics and Risks of Standardized
Options" (an OCC authored white paper on options risks). U.S. investors should consult
with a FINRA Registered Options Principal.
For detailed information regarding the risks involved with investing in listed options:
http://www.theocc.com/about/publications/character-risks.jsp.
Valuation & risk
Brazil (BRAZIL)
We are Marketweight Brazil's EXD with currently wide spreads compensating for the
risks. The political crisis concerns investors and growth has been weaker than expected.
However, spreads are quite high compared to LatAm investment grades. There are
positive and negative tail risks for growth, as a resolution to the political paralysis could
bring confidence back up quickly and improve the economic backdrop. With this positive
tail risk, and a stronger fiscal adjustment in 2016, economic recovery could start in
2Q16. On the downside, pressures on GDP could increase if the political scenario
deteriorates further, with the government failing to approve fiscal measures and/or
Brazil shifting to a heterodox policy.
Colombia (COLOM)
Spreads, which have widened this year adequately compensate investors for the risk, in
our view, and leads us to our Marketweight view. Downside risks are a rapid inflation
acceleration from pass-through effects, which would be a difficult problem for
macroeconomic policy. Also oil price weakness raises risk of recession. Fiscal and
external difficulties generate incentives to relax the fiscal rule. Upside risks are a rise in
commodity prices and stronger than expected growth.
Mexico (MEX)
Mexico's tight spreads fairly reflect the better quality of Mexican debt compared to
most of LatAm, in our view. We forecast Mexico's activity growth to remain in the 2-3%
range. Downside risks are lower growth in the US, lower oil prices and slower domestic
oil production. A disorderly normalization of US monetary policy is a risk to Mexico's
financial stability as well. Upside risks are higher oil prices and stronger US growth.
Turkey (TURKEY)
We are Overweight as Turkey Eurobonds lagged peers due to heightened political noise
during the summer. Since Moody's downgraded the sovereign, all negative impact of the
attempted coup seems to be priced and we think that bonds offer value vs peers.
Downside risks are stronger outflows than expected and heightened political noise.
Joside risks include a generalized rally on the back of more positive global backdron.
Analyst Certification
We, David Woo, Adarsh Sinha, Arko Sen, Claudio Irigoyen, Jane Brauer, Kamal Sharma,
Mark Capleton, Paul Ciana, CMT and Ralf Presser, CFA, hereby certify that the views
each of us has expressed in this research report accurately reflect each of our respective
personal views about the subject securities and issuers. We also certify that no part of
our respective compensation was, is, or will be, directly or indirectly, related to the
specific recommendations or view expressed in this research report.
Bankof America
Merrill Lynch
Global Rates, FX & EM 2017 Year Ahead | 16 November 2016
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