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Daily Stock Market Equity and Options Trading Commentary

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Friday, February 6, 2009

Financial Calls Heating up in Today's Options Market

Could the bottom for financials be in? The top contracts traded today certainly were bullish on financials. The top ten contracts traded today were:
1: XLF FEB 10 CALL
2: XLF FEB 12 CALL
3: BAC FEB 6 CALL
4: BAC FEB 7.5 CALL
5: XLF FEB 11 CALL
6: XLF JUN 11 CALL
7: WFC FEB 20 CALL
8: XLF FEB 9 CALL
9: BAC FEB 2.5 PUT
10: EFA MAR 36 PUT

This certainly shows bullish signs in financials! This is the second of three days there has been focus on financial calls. It may be due to speculation of the bad bank however it could be looking ahead even further such as the XLF June 11 Call predicts. The last price for the June XLF 11 was $1.00 which assumes the ETF will be above $12 in June or about 25% higher than today's close. Many came out today and said BAC still has very good assets on the books, and that a nationalization is unlikely, however if this mess does not get better nationalization will be the only option for BAC and some other banks. Truly I hope the bottom is in, but it the market has a short term 10% pop or greater, I will certainly be adding to my SDS position.

Tomorrow some very important numbers come out, the unemployment rate. The expected is 7.5% anything worse could cause markets to tumble, and anything better could cause markets to rally. This will definitely have a major impact on the market.


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