<i>&quot;The derivative I’d sold was an option, but it worked just like an insurance policy.&quot;</i><p>That sums up the whole derivatives implosion.<p>Never mind that a rocket scientist had calculated that the foreseeable maximum downside was $30 million, this is why the insurance industry has relatively high capital requirements. Ibankers were writing exotic insurance contracts and, only because they were not called insurance, they were also flauting the capital requirements.<p>Those who claim &quot;it&#x27;s complicated&quot; are making excuses. The ibankers running these deals should have been jailed for violating insurance regulations.