On Apr 25, 12:40 pm, beliav...@[EMAIL PROTECTED]
wrote:
>
> This and the rest of your advice is sound, but as a practical matter,
> to estimate the "fair value" of these products, you need to be a
> derivatives specialist, comfortable with the Black Scholes model and
> its ofshoots. Part of my job used to be valuing such products, using
> traded options on the SPX index as inputs. The annuity market is one-
> sided -- the insurance company quotes you an offer price, but not a
> bid price -- the price at which *they* would buy the contract.
>
> Exchange-traded structured products AKA index-linked notes with
> similar features to indexed annuities are traded on the AMEX --
seehttp://www.amex.com/?href=/strProd/SPMain.jsp.
Those products are
> initially sold to brokerage customers at a 5 to 10% markup, in my
> experience, but their prices on the secondary market after the initial
> offering may be fair. The bid-ask spread will typically be much
> smaller than the surrender fee of an annuity.
Very interesting. I am admittedly not very well versed in that area. I
also admit I did not do a great job of addressing the OPs primary
question (which you do). Everyone please consider my post more of a
slightly off-topic, warning to anyone considering these products.
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