One thing seems clear about JPMorgan Chase's $2 billion loss. It's no longer $2 billion. It's likely much higher.
The number being bandied about now is closer to a range of $6 billion to $7 billion, according to several people working on trading desks that specialize in the derivatives JPMorgan Chase used to make its trades and from two sources with knowledge of the bank's positions.
JPMorgan Chase declined to comment on its trading activities. Of course, it is impossible to know with absolute certainty just how high the losses are at any given moment.
But experts said there are few scenarios in which hedge funds on the other side of the bank's giant bet will let JPMorgan Chase out of it without significantly more pain.
"The market knows roughly what [JPMorgan] has and what the sizes are," said a source with knowledge of the bank's positions.
Why have the losses grown since chief executive officer Jamie Dimon informed the public of them? The market's overall slide hasn't helped.
Since last Thursday, the U.S. and European stock markets have dropped significantly. The S&P 500 is down roughly 3.5%, and the main European indexes are down between 4% and 6%.
JPMorgan Chase's trades were built around contracts tied to corporate bonds. Specifically, JPMorgan Chase sold huge amounts of protection on an index of 125 highly rated corporate bonds. Simply put, JPMorgan Chase's massive trade stood a better chance to pay off if the market had continued to rally.
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