The Plunge Protection Team (shown) going to have to get cranking in the financials.
I want to do a little analysis of the FNM options board, but I can't type fast enough to keep it contemporaneous. The stock had a 35% rally to the highs, then gave it all back by 9:50 AM.
The Dec. 10 straddle carries a 180 volatility right now. In pure dollars that is about $8. I know I promised there would be no math involved in options, but a little back of the envelope magic tells me that this thing maxes out at $10 on the downside.
I bought a little stock on the (very) short term bet that Bernanke would sooner shave his beard into a Fu Manchu than see these pups close red today. I have some overpriced long gamma in SKF and my quick trigger on the Stop button to offset it.
8 comments:
Nothin' like a lil gov't intervention to start off the week eh?
Here's to a lower dollar, high gold and oil, and years of taxpayers footing the bill, lol if nothing else it should make for another funny Don Harrold video.
y, i mean if there was ever a case of "too big to fail" it has to be these. Still ridiculous though, this whole cycle of events. Let them get out of hand, then when it turns we have the dual bailout and "blame the shorts" response.
yea, like you said in another post last week, we got folks blaming speculators for pushing up oil and at the same time, these SAME people are blaming shorts (and the lack of the uptick rule) for pushing down financials. lol, i mean come on now.
i agree that "some" gov't bailout was needed these past 12 months or else we fall into the hole the Japanese fell into 2 decades ago, BUT playing the blame game is not good for anyone.
but i guess things could always be worse...we could have Cramer and Lenny running the show in DC.
didn't Cramer actually have some sort of plan he gave the government? I'm totally serious, I think he was on a task force or something. Scary.
Cramer, now that is scarey. Glad to see Bernanke is getting back to destroying the dollar.
Happy Birthday
Unfortunately, this had to be done, not because of Fannie's and Freddie's own balance sheet, but because banks everywhere hold paper in their Tier 1 pool that is "backed" by Fannie and Freddie.
Trust me, collapse of these babies would be too terrible to contemplate...I mean, we might start seeing soup lines and guys wearing fedoras.
As I mentioned in the other thread, Ben will force them to deleverage and shrink their balance sheet, haircut bondholders (would there were long-dated puts on the bonds!), and let assets run off. Paradoxically, this might actually help the stock as spreads may widen.
Can We Afford Not To Have Cramer Solve This Mess?
and thanks for the BDay wishes.
karl: Yes, agreed, they truly are too big to fail. But it's possible the equity gets wiped out as part of the "rescue". Options sure seem to think so.
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