Declan Murphy wrote:
> Brett Robson wrote:
> 
>> On Wed, 4 Jun 2003 11:50:01 -0400, "Kevin  ...
>>
>>>> 2. Where should I have put the money?
>>>
>>>
>>> Outside Japan. My checking accout has a 1.31% APY. Put the money there.
>>
>>
>> The US dollar is at a 2 year low to the Yen.
>>
>> http://au.finance.yahoo.com/m5?&a=1&s=USD&t=JPY&c=2
>>
>> So you would seriously suggest someone put money in US dollars to get 
>> a 1.3%
>> return in the face of a strong possiblity of an adverse movement in 
>> the exchange
>> rate?
>>
>> (if you don't understand the above, I'm sure Declan would be happy to 
>> fill you in).
> 
> Actually I don't think I would be. Real exchange rates and hedges are a 
> bitch.

But in Foxy Emma Jane's case, I think it would have been more of a pure
directionality bet, and hence not hedgeable.  If hedging were possible
whilst capturing the interest rate differential, arbitraging would
have been possible...
Anyway, a 3-month plain-vanilla AUD call option with a spot of around
70 in early Feb, strike@75 would have gained about 460%.  FEJ's JPY
600K could have morphed into JPY 3400K, not a bad return for 3 months.
Of course, she should have been prepared to lose all of her money too,
but that minor detail just adds the required spice and excitement to
unhedged position-taking, isn't it ?