Andy Krieger Shorts The New Zealand Dollar Kiwi And Nets $300 Million

Andy Krieger is considered to be one of the best currency traders. This Kiwi trade has been ranked in the top 10 trades ever made on the Wall Street History. This trade took place in 1987 right after the famous market crash known as the Black Monday. At that time, Andy Krieger was a young man 32 years old working for Banker’s Trust. Andy Krieger graduated from Wharton Business School. In 1986 he joined Banker’s Trust when he was hired as a currency options trader. While most currency traders at Banker’s Trust had an upper dealing limit of $50 Million, Andy had an upper dealing limit of $700 Million that was around a quarter of Banker’s Trust Capital. This just indicates how much the senior executives at the firm were confident about his trading abilities and skills.

Trading is all about timing. He guessed correctly that the New Zealand Dollar was highly overvalued and not sustainable. Options have an inherent inbuilt leverage in them. With a currency option of $100K, you can easily control $30 Million to $40 Million of the underlying currency. This is precisely what Andy did when he launched a speculative attack on the New Zealand Dollar using currency options. You can read more about this short trade here.  So he shorted the Kiwi using options. In those days options were new instruments. He took short position against the New Zealand Dollar worth millions of dollars. It has been reported that his short positions actually exceeded the New Zealand money supply. Whatever this trade of his netted $300 million and he got a $3 million bonus from his firm Banker’s Trust. You can read about the greatest trades in Wall Street History here.

In 1988, he left Banker’s Trust that set the Wall Street rumor mills buzzing what he plans to do in the future. He quit his second job that same year  with George Soros and formed his own trading company.