helplessobserver

Why Pandit Must Sell Phibro

I often wondered what happened to Phibro as back in the '80s oil and commodities bubble they made money hand over fist, so much that they took over a big Wall Street bond and brokerage house. Later the bond house took over Phibro. Englehard stripped Bunker Hunt of his oil leases, Kentucky Horse Farm and even the Rolex on his wrist as they crushed his long silver contracts by changing the trading rules which allowed no new long contracts to be traded. Silver opened each day limit down from $47 an ounce to less than $5 before it was over. Never underestimate the power of those people who make the trading rules.

20 Option Ideas to Protect and Profit: Financials

Very interesting, but why not buy FCS and sell an at the money strangle on FCX out to Jan10. Collect about 8 on the call and 8 on the put. If called you make about 28% in six months. Your down side protection is 15%. You can also use part of the $16 premium collected to buy put protection several points below your break even price. You need 2 puts per position first to protect your first 100 shares and another to protect against an assignment of 100 FCX stock in case of a market meltdown.

Why I Sell Put Options (Part I)

I personally like the strangle, buy the stock, sell a call on it and then sell a put, both near the money. If the stock gets called a 8-10% premium profits is gained. If the stock declines the premiums give a 6-8% discount from the buy. Below your break even price buy two out of the money puts to protect your capital. A strike on Iran will cause a 500 - 800 drop on the DJIA. I use an Excel spread sheet model to quickly compute profits, percentages and break even prices.

Is There Any Limit to Bank Arrogance?

Most people do not know the primary mission of a bank or lender. Ask Joe Six Pac and he will say lending money is their mission. This is completely wrong. The primary mission of any lender is measuring loan credit risk. Failing this mission on a massive scale has led to the destruction of our economy. So far as I can see little of the bad debt created has been extinguished with equity holders taking the biggest hit. At some time the hit must be taken by the holders of these bad assets. Bailout money does not produce wealth, so this waste cannot go on forever. We are living is LA, LA land.

Uneasy Silence About Regional Banks

I do not know about the others, but the only solvent large bank in the Southeastern US is BBT. Residents crushed by the losses taken by the mismanagement of Wacovia and Bank of America are moving to the only good bank around. Thousands of bank jobs have been lost and these ex employees are not staying with their previous employers. CEO Kelly King has managed to keep generating earnings while doing everything possible to work out troubled loans. If he needs capital he can cut the generous dividend.

Stress Tests: Where Do CDS Fit In?

One thing we must keep in mind is the purpose of banks holding all these CDS's. Regulators allow the upgrade of a loan say from tier II to tier l capital if it is insured by a CDS. European banks began massive CDS purchases, mostly from AIG, when they realized how low the credit value was on US issued CDOs they held as capital reserves. This is why the US taxpayer paid so much money to UK and other European banks. It made the $11 billion Marshall plan outlays look like chump change.

Wednesday Options Recap

Cetin is right if you buy them, but dead wrong if you, like the pros, write them. A May strangle written on FCX if called yields 9% in a little over one month. On the other hand if the stock is "put to you" the premium collected gets you FCX at a nice discount to its current price.

Will the PPIP Bankrupt the FDIC?

They had better be careful how they handle the FDIC. It is the only thing that is keeping us from complete financial collapse as it is preventing a $5T - $10T run on the banks. If the public loses confidence in the FDIC and starts pulling money out of the banks capitalism and rule of law is doomed.

One Easy CDS Fix

Wow, GS has liabilities that exceed its ability to pay by 1056%. It had better not return the TARP equity injection. Such lunacy demands correction.

Rating the Top 12 U.S. Banks - From Hidden Gems to Zombies

I suspect BBT will cut its dividend to about 0.25 per share. This will inject a massive amount of capital into an already strong capital structure. On the earnings CC CEO King noted things are unusual in the banking sector and the bank has troubled assets in Washington DC, Atlanta and Florida they are focusing on. He is less worried about his builders as they are required to have "skin" in the game to qualify for construction loans. His larger worry is a higher unemployment rate and resulting larger losses in its credit card and other consumer loans books. BBT is hunkered down in a strong bunker and doing what good business is available.

Banks Stressing the System vs. Potential Winners of the TARP Repayment Race

Mr. Market says BBT will have to pare its dividend, now 10% to the 5-6% range. This will free up several hundred millions of dollars that can be added to bank capital and make a strong bank even stronger. CEO King is most worried about unemployment >10% and its damage to his credit card loan book. He is least worried about his builders as they have to put up significant personal collateral to get a loan package.

2009's House of Pain: Consumer Loans and Credit Card Debt

The next revenue stream will come from assessing a fee on card holders who pay off their balances each month. We do that and between their accounting and Quickens we keep track of our total household expenditures, less a small amount of cash slippage.

Touchdown: When Do Financial Stocks Hit Zero?

Ira,
If the DJIA banks get nationalized along with other biggies, what happens to the solvent large regional banks like BBT, PNC and Comerica?

thanks,
helpless

Citigroup's Rescue: Hope Is the Essential Ingredient

Well, what happens if we have a taxpayer revolt, riots in the streets? Little by little the anger is rising. I expect if we get by with less than 10% unemployment we will be fortunate. Past generations suffered economic loss mostly in silence, you too big to fail people assume today's boomers will take their financial destruction calmly. I suggest you re-calibrate your models as a back lash is building.

The Problem With the Citi Bailout

There is no blood in the streets, but when all this becomes clear Paulson and his cronys had better be out of the country.