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A deal has reportedly been reached for a group of Russian investors to buy one of Cyprus' banks...

A deal has reportedly been reached for a group of Russian investors to buy one of Cyprus' banks for €4B. If so, it would greatly reduce the country's financing needs. The euro (FXE) moves about 40 pops higher, and European shares (FEZ) add nearly 1% to their gains. SPY at session highs, +0.6% premarket. Update at 8:35: A Cyrpus government spokesman is denying any such deal.
Comments (25)
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    I have a hard time believing this is true. Nobody in his right mind pays billions for insolvent banks.
    20 Mar 2013, 08:23 AM Reply Like
  • june1234
    , contributor
    Comments (3147) | Send Message
     
    They've been doing it for years. Ben has $3 trillion of worthless paper on his balance sheet , buying more every day
    20 Mar 2013, 08:34 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Paulo, would investors pay billions to buy amazon stock?
    20 Mar 2013, 08:59 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    I'll bet you that this deal is bogus.
    20 Mar 2013, 09:08 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    May be, but I am going to trade based on it and make money. I recommend that you do too.
    20 Mar 2013, 09:11 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    Ok, so I will be shorting this gap up here, what will you be doing to make money off it? Keep in mind that S&P futes are at 1550.50. So long or short here based on your take of the situation?
    20 Mar 2013, 09:13 AM Reply Like
  • PSalerno
    , contributor
    Comments (4062) | Send Message
     
    It is not confirmed, but possible.
    20 Mar 2013, 09:16 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    I will be buying puts on VXX.
    20 Mar 2013, 09:17 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    Which puts? What strike? You're aware that VXX will gap down at open so you will not get yesterday's prices, aren't you? You'll be buying a spike down. VXX at $21.05 right now, we'll use that as yardstick. You need it to go lower than that.
    20 Mar 2013, 09:20 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    I already have puts from yesterday, but why not use $21.05 as the yardstick? Will be fun. Let's use the 19 strike Aprils on that.
    20 Mar 2013, 10:04 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    So you traded today's news by buying puts yesterday? That makes a whole lot of sense.

     

    How did you guess that bogus deal? Were you privvy to it?
    20 Mar 2013, 10:06 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    April $19 strike opened at $0.68, now $0.57.
    20 Mar 2013, 10:08 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Paulo, I started buying $VXX puts on Monday morning and kept on buying puts till end of day Tuesday. You always have to sell insurance on volatility when professional traders like you are running for the hills. I posted my trades live.

     

    Was I privy to any news? Of course not. But it is really simple logic. Germany can't afford to have the EU and Euro fall apart over Cyprus, so of course they would fold (just like Republicans in the USA always fold - conservatives are like that). The only risk I had was the Cyprus Parliament accepting the deal, but I bet that with so much public outcry they won't. That's all the insider information I had.

     

    The puts are down, indeed, from the open of 68 to current price of 63. But there are two things in my favor here. First, the FOMC is going to goose the markets soon. Next, today is rollover day for the vix futures. There is a huge gap between March futures and spot. Plus there is a decent contango between March and April. Finally, this is just a rumor of a Cyprus bailout by the Russians, but I believe the true story will be that the ECB completely folds and begs Cyprus to stay.

     

    That will be the real rally and the real drop in VIX and hence VXX.
    20 Mar 2013, 10:40 AM Reply Like
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    The point was regarding trading on these specific news. You couldn't trade on these news yesterday.

     

    And I wasn't running for the hills on Monday - I actually covered an ES short into it and said as much.
    20 Mar 2013, 11:38 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Yes you could Paulo. Just look at that 19 strike April put on VXX. Up 10% from open.

     

    So, my recommendation makes 10% since in the 5 hours since open. How are your shorts doing?
    20 Mar 2013, 02:42 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (24394) | Send Message
     
    Congratulations, MI. Would you close it here, then?
    20 Mar 2013, 02:43 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Closed it already at 74. How are your shorts doing?
    20 Mar 2013, 03:03 PM Reply Like
  • sophos2
    , contributor
    Comments (149) | Send Message
     
    Maybe the mafia has the need for a bank?
    20 Mar 2013, 08:26 AM Reply Like
  • JeffreyLangBoyd
    , contributor
    Comments (663) | Send Message
     
    In the unlikely event that it is true, I would think it would kill the possibility that Cyprus would be part of the European banking supervision apparatus. Whether that would mean the supervisory idea is dead or just Cyprus is gone I don't know.

     

    Perhaps we really will see a country leave the European Union. Believe that it was only the Greeks who wanted them in the first place.
    20 Mar 2013, 09:57 AM Reply Like
  • Russell2011
    , contributor
    Comments (3) | Send Message
     
    perhaps this is a new way to launder off-shore parked funds by turning them into a bank.... quite smart.
    20 Mar 2013, 12:48 PM Reply Like
  • minecanary
    , contributor
    Comments (629) | Send Message
     
    But the unintended consequence would seem to be that the KGB's 40% of deposits held in other Cyprus banks would immediately shift to the one they would own....so the problem just migrates. Maybe with their present leverage the Russians will come out with a bank, a port, the gas fields, and give Europe a reaming for the threat.
    20 Mar 2013, 08:32 AM Reply Like
  • Macro Investor
    , contributor
    Comments (9050) | Send Message
     
    Merkel totally blew this one.
    20 Mar 2013, 09:00 AM Reply Like
  • RM13
    , contributor
    Comments (911) | Send Message
     
    Why don't you think it's real Paul? After all, paying 4 billion euros out of russian coffers is cheaper than losing all the russian deposits (worth 20 to 30 billion euros). Tit for tat, russian style.

     

    If this buy is true, who know, maybe cyprus banks will be the safest place to put your money in southern europe:).
    20 Mar 2013, 09:36 AM Reply Like
  • Sakelaris
    , contributor
    Comments (1692) | Send Message
     
    All or most of the above comments could be true--but I just wanted to add that within the last forty years only one of the current EU nations--Cyprus-has been invaded by another nation, has lost a third of its territory, lost thousands in civilians dead, raped or missing, and has had to resettle 200,000 of its population, who had to flee from the invaded area as refugees. The invading nation was Turkey in 1974, supplied with US weapons. Both the US and the British (who hold Cyprus bases) looked the other way. Turkey still occupies (and now colonizes) the northern third of the nation.

     

    Is is any wonder that this much-abused people might not "play nice?"
    20 Mar 2013, 11:33 AM Reply Like
  • rvn0
    , contributor
    Comments (137) | Send Message
     
    Bogus or not Russians would simply be returning some of the interest money that they made in Cyprus banks.
    20 Mar 2013, 01:44 PM Reply Like
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