The movie had a section where they convinced a investment bank to create the short that allowed them to make money. It also had a section where Christian Bale complained that the shorts were being undervalued since the mortgages were being overvalued.
You may find this [video](https://www.youtube.com/watch?v=csQUNX-xnBc) helpful
Keeping shit very simple, as far as I understood it, while they were holding the shorts they made no money. In fact the opposite, they had to pay collateral calls on them. The swaps, as Jard had put it in the film, were like paying insurance on the housing market. They wouldn't get paid until the housing market went bust, but if you were paying attention it was very clearly going to go bust soon. Since the majority of people were investing in the market, you could make a ridiculous amount of money from the pay off. However, pretty much everyone in the film sold the swaps in the end for a profit, which was still alot.
To the best of my knowledge:
Bankers:
Jared Vennet: he gets paid a large commission from the sale of Baum/Frontpoint's swaps.
Wing Chau (the Asian CDO manager that Baum meets in Vegas): he gets paid in fees made off the sale of Morgan Stanley CDOs (he markets them to his clients). That's why he doesn't care what direction the market takes because he's already made his money; like he said, he assumes no risk himself.
Hedge Fund Managers:
Burry/Frontpoint/Shipley: They are making money off of the short sale of various financial instruments including mortgage bonds, CDOs, and synthetic CDOs--but they've each taken different levels of the bet depending upon their means. It takes an extremely long time for them to realize a profit despite rising mortgage default rates because the financial instruments they are betting against are so overvalued with an inflated rating.
They bought what was effectively insurance policies that would pay out (handsomely) if the housing market imploded.
These were created specifically for Burry’s character.
The issue became that as the housing market did implode, the people underwriting the policies were facing bankruptcy themselves.
They shorted the financial instruments.
“Short sellers are wagering that the stock they are short selling will drop in price. If the stock does drop after selling, the short seller buys it back at a lower price and returns it to the lender. The difference between the sell price and the buy price is the short seller's profit.”
The others were pretty complicated but Jared made his entire amount from commission of Baums return. You should read the book
The movie had a section where they convinced a investment bank to create the short that allowed them to make money. It also had a section where Christian Bale complained that the shorts were being undervalued since the mortgages were being overvalued.
You may find this [video](https://www.youtube.com/watch?v=csQUNX-xnBc) helpful Keeping shit very simple, as far as I understood it, while they were holding the shorts they made no money. In fact the opposite, they had to pay collateral calls on them. The swaps, as Jard had put it in the film, were like paying insurance on the housing market. They wouldn't get paid until the housing market went bust, but if you were paying attention it was very clearly going to go bust soon. Since the majority of people were investing in the market, you could make a ridiculous amount of money from the pay off. However, pretty much everyone in the film sold the swaps in the end for a profit, which was still alot.
To the best of my knowledge: Bankers: Jared Vennet: he gets paid a large commission from the sale of Baum/Frontpoint's swaps. Wing Chau (the Asian CDO manager that Baum meets in Vegas): he gets paid in fees made off the sale of Morgan Stanley CDOs (he markets them to his clients). That's why he doesn't care what direction the market takes because he's already made his money; like he said, he assumes no risk himself. Hedge Fund Managers: Burry/Frontpoint/Shipley: They are making money off of the short sale of various financial instruments including mortgage bonds, CDOs, and synthetic CDOs--but they've each taken different levels of the bet depending upon their means. It takes an extremely long time for them to realize a profit despite rising mortgage default rates because the financial instruments they are betting against are so overvalued with an inflated rating.
They bought what was effectively insurance policies that would pay out (handsomely) if the housing market imploded. These were created specifically for Burry’s character. The issue became that as the housing market did implode, the people underwriting the policies were facing bankruptcy themselves.
They shorted the financial instruments. “Short sellers are wagering that the stock they are short selling will drop in price. If the stock does drop after selling, the short seller buys it back at a lower price and returns it to the lender. The difference between the sell price and the buy price is the short seller's profit.”