CONTENTS -- Preface -- Acknowledgments -- About the Author -- List of Figures -- List of Tables -- List of Boxes -- Chapter 1: Derivatives and theWealth of Nations -- What are Derivatives? -- A Brief History of Derivatives -- Derivatives and theWealth of Nations -- Organization of the Book -- Bibliography -- PART I: FORWARDS -- Chapter 2: Showa Shell Sekiyu K.K. -- Hedging Currency Risk at Oil Companies -- The Mechanics of Hedging Dollar Exchange Rate Risk and Oil Price Risk -- Was Showa Shell Hedging or Speculating? -- Concealing Currency Losses -- The Story Unfolds -- Forecasting Exchange Rates: Treacherous at Best -- The Moral of the Story -- Questions for Further Discussion -- Chapter 3: Citibank's Forex Losses -- Currency Trading in the Tranquil Days of BrettonWoods -- Gambling on Currencies with Forward Contracts -- How Do Banks Keep a Lid on Their Foreign Exchange Trading Operations -- Speculating from a Commercial Bank's Trading Desk: When Citibank is Not Quite a Hedge Fund à La Georges Soros -- Hasty and Costly Conclusion -- The Moral of the Story -- QUESTIONS FOR DISCUSSION -- Chapter 4: Bank Negara Malaysia -- What is Central Banking All About? -- Bank Negara as a Macro-Hedge Fund -- How Did Bank Negara Speculate? -- PART II: FUTURES -- Chapter 5: Amaranth Advisors LLC -- The Rise and Fall of Amaranth Advisors LLC -- Genesis of Natural Gas Derivatives -- A Primer on Speculating in Natural Gas Derivatives -- The Alchemy of Speculation Through Natural Gas Futures -- The Story Unfolds: Amaranth Speclative Assault on Nymex -- Risk Management at Amaranth -- The Moral of the Story -- Postscript -- Questions for Discussion -- Chapter 6: Metallgesellschaft -- The Metallgesellschaft Debacle -- The "Long and Short" of Hedging in the Oil Market -- Numerical Illustration of "Ebbs & Flows" Under a "Stack & Roll" Hedge.

The "Message is in the Entrails": Empirics of the Oil Market (1983-2002) -- If Only MGRM Had Been Allowed to Roll the Dice -- When a Hedge is a Gamble:Was MGRM Hedging or Speculating? -- MGRM as a Market Maker -- The Moral of the Story -- Bibliography -- Questions for Discussion -- Chapter 7: Sumitomo -- Was Sumitomo Manipulating Copper Prices? -- Alarm Bells -- Debacle -- Postscript -- PART III: OPTIONS -- Chapter 8: Allied Lyons -- A New Mission for Allied Lyons Treasury Department -- A Primer on Currency Options:Was Allied Lyons Hedging or Speculating? -- Selling Volatility: Allied-Lyons "Deadly Game" -- Alarm Bells are Ignored as the Story Unfolds -- The Moral of the Story -- Appendix: Pricing Currency Options -- Chapter 9: Allied Irish Banks -- Rusnak and Currency Trading at Allfirst -- Gambling on Currencies with Forward Contracts -- Arbitraging the Forward and Option Market: The International Put-Call Parity Theorem -- The Art of Concealment -- When Alarm Bells are Ignored -- The Moral of the Story -- Epilogue -- Bibliography -- Questions for Discussion -- Chapter 10: Barings -- The Rise and Fall of the House of Barings -- Rogue Trader -- Arbitrage -- From Harmless Arbitrage to Lethal Speculation -- A Primer on How to Speculate with Options -- Financing Margin Calls by Selling Volatility -- Warning Bells -- The Art of Concealment -- The Moral of the Story: Leeson's Seven Lessons -- Epilogue -- Bibliography -- Questions for Discussion -- Chapter 11: Société Générale -- The Making of a Rogue Trader -- From Arbitrage to Directional Trades -- Hasty Conclustion -- When Alarm Bells are Ignored -- The Art of Concealment -- The Moral of the Story -- Postscript -- Bibliography -- Questions for Discussion -- PART IV: SWAPS -- Chapter 12: Procter & Gamble -- How to Reduce Financing Costs with Levered Interest Rate Swaps.

Embedded Options and Hidden Risks -- Landmark Lawsuit -- The Moral of the Story -- Bibliography -- Questions for Discussion -- Chapter 13: Gibson Greeting Cards -- Chapter 14: Orange County -- Municipal Finance in Orange County -- A Primer on Fixed Income Securities -- Anatomy of Orange County Asset Portfolio -- OCIP as a Hedge Fund -- Double Jeopardy: How Orange County Collapsed -- Was Filing for Bankruptcy Warranted? -- The Moral of the Story -- Epilogue -- Bibliography -- Questions for Discussion -- Chapter 15: Long-Term Capital Management -- What are Hedge Funds? -- The Rise of Long-Term Capital Management -- The Alchemy of Finance -- Relative Value or Convergence Trades -- The Central Bank of Volatility -- Straying Away from the Master Plan -- The Fall of LTCM -- The Rescue of LTCM -- The Moral of the Story -- Epilogue -- Bibliography -- Questions for discussion -- Chapter 16: AIG -- Securitization and Credit Default Swaps -- What are Credit Default Swaps (CDS)? -- The Moral of the Story -- Chapter 17: From Theory to Malpractice: Lessons Learned -- Some First Principles -- Policy Recommendations for Non-financial Firms -- Policy Recommendations for Financial Institutions -- Policy Recommendations for Investors -- Policy Recommendations for Regulators -- Index.