Kadena sent an email to me yesterday asking about E-Trade (ETFC) and US Bancorp (USB) and my short term opinions on them.
Motley Fool had a bullish article on ETFC yesterday. Maybe ETFC is just falling with the overall market’s concerns of the subprime woes. The chart is scary. Before I get in I want to see the price come back above its previous trend line of lower lows. I don’t like betting against a trend and the trend for E Trade isn’t too good right now. The only short term play that could be worth the risk would be to buy August 20 calls. Buying August 17.50 puts might not be such a bad move either, but with a p/e so low already I don’t think ETFC will fall much more. The only question is when it will come back north.
US Bancorp (USB) has been on a bad fall since the end of March and recently that already steep decline got worse. Maybe it’s a capitulation and the end of the fall is over. This is a stock that can move 50 cents in either direction on any given day, with a bias south. The August 30 calls are ITM and could give a quick return for someone who doesn’t mind the risk and buying some. The September 32.50 calls could be good to buy too. They are $2 OTM, but were in that range four days ago. If the market settles down in the next few weeks USB could be back up above that range and the .35/.45 premium could easily break $1.00 if not higher. If Motley Fool’s opinion is right, USB could find some love soon.
I think Kadena has found two good stocks to consider for a slightly risky option buy. I want to wait another day or two before really moving on these to make sure the fall doesn’t keep going. Waiting one to two days could be all it takes to miss the move though.
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