Over the past 2 years, the Euro banks have returned to shareholders losses of over 50%. The stocks are off their lows from June and despite the more recent broad market sell-off on Sept. 9th, they’re holding along with their domestic counterparts like Bank of America and JP Morgan. When we here at Sang Lucci talk European banks we’re speaking about Santander, Credit Suisse and Deutsche Bank. Today we saw a player take an aggressive bet on a major comeback in this sector and it caught our attention.
On Credit Suisse, the trader paid through the spread for just under 20K contracts at a cost of $.45. That’s almost $900K in pure premium and the stock needs to get through $16 for this trader to really make money. With only 3 months left until expiration this trader is betting on something big and if you take a look at the stock, this bet may not seem that crazy.
Trading these stocks requires you to buy time because most of the intraday moves are non existent. The stocks gap everyday and then do nothing for the most part. Previous resistance on the chart is right around $16 and these names gap aggressively. Any rotation into banks even domestically in the U.S. will help this trader rack up profits. Obstacles for this particular bet all come from action on the indexes. You can definitely get this bet for cheaper so continue to monitor Financials for more confidence and be patient.
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