Lehman Brothers is on the headline again as possible successor to the Bear Stern tragedy. On Friday, the put volumes have increased dramatically. Yesterday itself, after memorial holidays, there were alot of volume generated on the put side early on during the trading hour. Even the June option with the strike price of USD17 attracted quite a swarm of bear lovers. Even though, LEH managed to crawl itself into the green 2 hours into trading, the speculators were still attracted to the OTM options. As a result, at one time both put & call options are in the positive territory. This shows that the market participant including me is very unsure about the direction the stock is heading but still anticipating some big moves hereafter.But as with any struggle, there will be a winner and a loser. The bull emerged victorious as LEH closed up at USD37.50 after normal trading hours.
Unlike the Bear Stearn fiasco, there was a smoking gun in the form of a hedge fund manager that is infamous for short selling stocks. See news below. Nevertheless, i still doubt that the stocks could plunge yesterday as people tend to buy rumour and sell news in this type of situation.
Posted May 23, 2008 03:41pm EDT by Aaron Task in Investing, Newsmakers, Venture Capital, M and A, IPOs, Banking
Related: LEH, BSC, JPM, WB, UBS, MCO, C
Related: LEH, BSC, JPM, WB, UBS, MCO, C
Oil's rise is (understandably) getting all the attention. But it's no coincidence the market's tumble this week was accompanied by renewed weakness in the financial stocks, which make up about 16% of the S&P 500.
A week pockmarked by negative news out of AIG, Moody's and UBS came to a close with a revival of concerns about the fate of Lehman Brothers, whose shares lost about 20% this week.
The selling was triggered by highly critical comments about Lehman's treatment of illiquid assets by noted short seller David Einhorn, as reported in The Wall Street Journal.
Lehman refutes Einhorn's claims as self-serving. But Friday's put buying (a bearish bet) in Lehman was more than double the 30-day daily average and about four times the (bullish) call activity, notes Jon Najarian, co-founder of OptionMONSTER.com and a CNBC contributor.
Najarian believes Lehman Brothers is better positioned than Bear Stearns was but thinks it too will ultimately be acquired, naming Deutsche Bank, HSBC and Banc America as potential buyers.
He also thinks HSBC is eyeing a big purchase in Europe and envisions yet another takeover coup for JPMorgan's Jamie Dimon.
Najarian believes Lehman Brothers is better positioned than Bear Stearns was but thinks it too will ultimately be acquired, naming Deutsche Bank, HSBC and Banc America as potential buyers.
He also thinks HSBC is eyeing a big purchase in Europe and envisions yet another takeover coup for JPMorgan's Jamie Dimon.
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