At the start of 2011, Alexandre de Zagottis, CEO at Advis Investimentos and his two co-heads of investment, Eduardo Bodra and Julio Marote, saw an opportunity to buy options that would come into the money if Brazil reduced rates. This was a contrarian view and the options were cheap. “The yield curve was pricing in rate hikes which we too thought might happen, but we also believed that if the external environment deteriorated, this would be a cheap hedge. Options were an intelligent way to hedge against the Armageddon scenario in Europe,” says De Zagottis in São Paulo.
(The first paragraph of this article is reprinted here as originally submitted to Latin Finance. To read the complete and fully edited story, please go to the Latin Finance website, www.latinfiannce.com)