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Lehman Brothers is pitching to institutional and high-net-worth clients a short-term strangle strategy that aims to take advantage of the current high levels of near-term volatility of certain stocks in the Standard & Poor's 500. Lehman last week drew up a list of stocks, including Apple Computer and Hewlett-Packard, for which this trade makes sense, said Paul Lieberman, v.p., equity derivatives and quantitative research in New York.

Salomon Smith Barney has hired two equity derivatives professionals in Hong Kong to help cover Korea. James Jung-Beck Kim, equity derivatives trader at Morgan Stanley in Hong Kong, has joined Salomon as director, equity derivatives trading to run the Korea book. Moon Soo Kim, formerly of fixed income sales at Goldman Sachs, also in Hong Kong, is now the director of equity derivatives sales, Korea coverage. They report to Harold Kim, managing director, co-head of Asia-Pacific equity derivatives for SSB.

Granting rehypothecation or "use rights" with respect to pledged collateral is common in the over-the-counter derivative market. In fact, subject to the pledgor's consent, the credit support annex to the International Swaps and Derivatives Association master agreement provides the secured party with the right to rehypothecate, or use for its own purposes, collateral pledged to it---subject only to the obligation to return the collateral once the pledgor has satisfied its obligations. Customers, however, are often alarmed to learn that the dealer requires such an unrestricted right to use and sell the pledged collateral.

Energy and commodities behemoth Enron and Korean consulting firm WeatherMoney are looking at offering weather derivatives to Korean power companies because of deregulation in the country's power industry. Earlier this month, the government split the monopoly electricity producer Korea Electric Power Corporation into five regional companies and one nuclear energy company. When a country deregulates its power industry, competition often spurs power companies to become more sophisticated in managing risk, said Sangwook Ahn, ceo of WeatherMoney in Seoul.

Banking on the Federal Reserve cutting rates another 50 basis points in the short term,BNY Asset Management has been selling longer maturity treasury notes in favor of MBS, and possibly corporates further down the track. Margo Cook, who heads up the firm's $5 billion institutional fixed income division, says her most recent move was to sell long-term treasuries in favor of Ginnie Mae 7%s. "We've been moving more into 7%s and 7.5%s, because they've been beaten up by worries over refinancing, and we think those spreads will tighten."

And you think this market is claiming its share of bodies! A man who lost a fortune in the Milan stock market claims he snatched the corpse of legendary Italian banker Enrico Cuccia and would only return it when the market boomed again. According to Reuters, it was a move of desperation. "You will think I am mad, but I'm not. I'm just exasperated," the unidentified Italian wrote in a letter to the ANSA news agency. The man added in his letter that if the market didn't show signs of recovery by the end of the year, he would begin "hitting people in the world of finance and financial journalists, who like Cuccia, have contributed to my ruin." Police said they're keeping their options open.

Fifth Third Investment Advisors is planning to rotate $450 million from agencies (one- to three-year Fannie Mae and Freddie Mac paper) into a combination of corporate and MBS, says portfolio manager Mitch Stapley. In spite of the equity market downturn, the portfolio manager believes that the 4.3% unemployment rate reflects a strong job market, affecting select segments of the economy, such as telecoms, but has not had a negative effect on the broader service oriented aspects of the economy.

D.B. Fitzpatrick will be shortening the overall portfolio duration to index neutral by quarter-end, on the view that the effect of further interest rate cuts will be confined to the shorter end of the curve, says Brian McGrath, portfolio manager at the Boise, Idaho-based investment firm. McGrath, who manages a $200 million Treasuries and agency portfolio, will not change his current allocation, but move instead from intermediate range to short term.

Value Line Investment Management is buying the newly issued subordinated 10-year Fannie Mae (Aa2AA) and Freddie Mac (Aa2/AA) bonds on the view that their recent spread-widening was overdone. Bruce Alston, portfolio manager in New York, stocked up on the subordinated debentures from the GSEs at 33 basis points off the 10-year Treasury bond, reckoning he would reverse the trade at 20 basis points. He declined to reveal the amounts. Another program he recently executed was buying 6% conventional pass-throughs for yield-enhancement purposes, as they were trading at the $99 level. This brought his mortgage allocation up to 35% from 33%, a move of $18 million.

Some sellside banking analysts are raising eyebrows at Bank One Corp.'s (Aa3/A) acquisition last week of Wachovia Corp.'s $8 billion portfolio of consumer credit card receivables. They argue that the threat of an extended economic slump could lead to widespread customer default. Also cited as a risk is the bank's already substantial credit card exposure, through credit-card issuer First USA, which has been struggling and has yet to show clear signs of a turnaround, they add. A Bank One spokesman declined comment.

Emmis Communications hit 100 and Young Broadcasting traded at 100.75 last week, a note of strength for two credits in a weakening sector. Dealers said the trades were at $5 million each. "Broadcasting is softer in general, but the asset value is keeping the paper from softening further for now," a trader observed.