how did john Paulson made the greatest trade in history ( no need to talk about his history just about the trade in detail)How did he manage to make a fortune onDERIVATIVE SWAPS during the financial...

John Paulson was a hedge fund manager. He did a series of smart bets in the real estate sector
without understanding exactly how the derivative swaps worked. His intuition told him that
needed to work on this. The intuition paid and he became a billionaire in a very short period of
time. He was ably assisted by Paolo Pellegrini. Together they made the greatest trade in history.
John Paulson built a hedge fund and when the housing sector started collapsing on the Wall
Street he decided to start betting on the housing sector through a credit derivative swap (CDS).
He earned $15 billion in one day through betting on CDS. Paulson started buying the CDS
contracts which were basically insurance policies on debt. They came in very cheap as the real
estate sector started its collapse and all those who were dealing in the real estate were hurriedly
disposing off their interest in the market. Having no idea how to execute this, they decided to set
up a specific hedge fund to bet on the housing sector. When all other hedge funds were trying to
wriggle out of the housing sector, Paulson bet heavily on the housing sector using the CDS.
Though the CDS were very complex, Paulson made it look very simple. He bet on CDS against
mortgages of the real estate. This meant that if home owners defaulted out on their payments, the
insurance...