You know who has been unloved, not to mention... undervalued? That's right. The banks. No matter how tough it gets for this group, we always preach keeping several core positions across the space. The ultimate value story in the worst of times. An untamed beast in the best. The group ventured out of their cages on Wednesday, but let's face it... the banks have had a lousy week, lousy month, lousy year.
What Are "Closed-End" Mutual Funds and How Do They Fit into Savvy Investors' Portfolios?Click here to register for a free online video in which TheStreet's retirement expert Robert Powell and an all-star panel run down all you need to know.
If you read the kid, you know that I almost always am long JPMorgan (JPM) - Get JPMorgan Chase & Co. (JPM) Report . As best in class, they make it easy. Citigroup (C) - Get Citigroup Inc. Report remains an extreme valuation play, and besides that, they are throwing a ton of money at us, the shareholders. Then there's Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report . Honestly, the new guy can't be any worse than the last, right? Besides, the trading game is going to get pretty gnarly.
Investment banking will be the new focus they say -- and perhaps it will, but the environment for trading is about to get volatile (my prediction). That may lead this Solomon (brother) all the way home to where GS belongs.
Trade Ideas: The Two-Minute Drill (minimal lots)
Under-exposed to the banks? Need to catch up, but dreading the very thought of paying up for names on the move. Earnings start coming in next week, gang. Premiums will be paid now for taking on certain risks. Can you dig it? Should you dig it?
Don't throw a "Hail Mary" pass as time runs out. Throw around some ideas for those needing to get involved. Note: These prices are going to be moving around, so the trader is going to have to adjust these prices for windage and elevation.
For The Kid Who Has Everything
--Purchase 100 shares of JPMorgan (JPM) (last: $114.24)
--Sell (write) one JPM October 12 $111 put option (last: $0.50)
--Sell (write) one JPM October 12 $117 call option (last $0.61)
Note: JPM reports next Friday, and goes ex-div today.
1) JPM closes next week between $111 and $117...The trader owns 100 shares at a net basis of $113.13.
2) JPM closes next week above $117...The trader is called away, ending the week flat, with a profit of $3.87.
3) JPM closes next week below $111...The trader has 100 shares put to him or her, ends the week long 200 shares at a net basis of $112.07.
For The Kid On A Budget
--Sell (write) one KEY January 2019 $20 put option (last: $0.95)
--Sell (write) one KEY January 2019 $22 call option (last: $0.30)
Note: You must go out three months in order to gain sufficient premium value to make theses sales worthwhile.
1) KEY closes on January 19 between $20 and $22...The trader owns 100 shares at a net basis of $18.89.
2) KEY closes on January 19 above $22... The trader is called away, and is at that point flat the name with a profit of $2.11.
3) KEY closes on January 19 below $20 .. The trader has 100 shares put to him or her, and is now long 200 shares at a net basis of $19.45.
At the time of publication, Stephen Guilfoyle was long C, JPM, GS, KEY equity and short JPM puts.