What banking crisis?
Yo Pit Crazies,
Why are new highs and new lows significant?
Because it reveals where the money is going.
Looking at money flow is something we do in Big Money Flow every day of the week at Option Pit.
A while ago we saw some call buying in a lot of the big banks and in Charles Schwab (Ticker: SCHW), which happens to be the 11th largest bank by deposits.
A funny thing happens when the Fed does massive bank recapitalization … The banks stop falling!
Why do I keep writing about this?
Because this was the story for three weeks.
The Fairy Godfather waved his wand and J-Pow averted another crisis in modern finance.
SCHW
Are SCHW calls cheap enough to buy?
The MAGIC EIGHT BALL SAYS YES!
One of my favorite trade setups is a stock that is Steady Eddie – and then all of a sudden the bottom drops out due to some media issue.
I have been buying a lot of 3M Inc. (Ticker: MMM) for the same reason. That is another post and I already own it in the OP Mentoring Div+ strategy.
Right now, my question is does SCHW get back to $70. I think it has a good shot.
While the short term issues in the bond market caused fits for some banks, not all banks were unprepared. As of now SCHW looks like it will get back to $70 by Jun.
It seems all the banks are drifting back up to their pre-crisis levels. SCHW Jun16 60 calls are under $1.25.
The price is right and IV looks relatively low with respect to the gain potential.
To Your Trading Success,
AG