Live trade demo
Watch a margined trade on the Auto Subprime Credit Index play out month by month over real history, then see how a subprime-auto lender uses the same index to hedge. Test USDC; illustrative only.
Part 1 — Two traders, opposite views
📈 Long Larry
Believes subprime credit will deteriorate (index ↑)
PnL—
Initial margin—
Maintenance margin—
Account equity—
Status—
📉 Short Sarah
Believes credit will improve / hold (index ↓)
PnL—
Initial margin—
Maintenance margin—
Account equity—
Status—
Index level & each trader's equity
Part 2 — How a subprime-auto lender hedges
A lender holds a pool of subprime auto loans (long credit — it loses value as delinquencies rise). It hedges by going long the index, sized to its credit sensitivity. Portfolio mark is an illustrative model off the index, not a market quote.
portfolio loses β× the index's % move
% of full hedge
Portfolio — unhedged
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Hedge PnL (long index)
—
Portfolio — hedged
—
Drawdown avoided
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