I saw this too. I think someone sold the 62.50 puts and used the proceeds to buy the 72.50 calls, while also selling the 77.50 calls. The sold call options will cap the traders profits, but will also offset some of the cost if falls below the 62.50 strike price. The trader would have pocketed money to put this trade on, depending on how many call options they sold.
Missed EPS by 2 cents, and we lose $1.6B in market cap. Seems a bit extreme. NIM fell by 0.01% from 2nd Qtr.
did they release earnings early? this was in the charleston paper....
looks like 47 cent/share
BB&T Corp., the national bank with the third-largest market share in South Carolina, today reported that net income for its fiscal second quarter rose 46% to $327 million, from $224 million in the second quarter last year.
“The increase was driven by significantly improved credit quality and solid performances across all of our lines of business. Net revenues totaled $2.2 billion this quarter, up approximately 28% annualized compared to the first quarter this year. This increase was generated by lower funding costs, stronger insurance commissions and lower losses from problem loan sales,” said Chairman and CEO Kelly S. King.
Net interest margin improved to 4.15% in the second quarter compared to 4.01% in the first quarter. The bank’s acquired loan portfolios continue to outperform and have enhanced its outlook for the margin compared to last quarter.
“We currently project that the margin will remain in the 4.05% to 4.10% range throughout the remainder of 2011. In addition, the margin is also benefitting from a more favorable funding mix, lower cost of funds and wider credit spreads,” King said.
“The pace of improvement in our credit quality accelerated this quarter,” King said. “In particular, the 25% decrease in inflows of new nonperforming assets and $675 million in sales of problem assets resulted in a 13% decrease in nonperforming assets. In the last year, we have reduced nonperforming assets by approximately $1 billion to the lowest level in two years.
In spite of continued soft demand, BB&T reported broad-based loan growth. BB&T’s loans held for investment, excluding the bank’s covered and residential ADC portfolios, grew 3.4% on an annualized basis.
“In addition, we have good momentum heading into the third quarter, with end of period balances $810 million higher than at the beginning of the quarter,” King said.
I'm certainly not savvy in these matters either...
Read the story too. They want stock and not cash...kind of odd. Guess they feel the US assets could be worth a lot more if they were well run. If so, why do they not just buy BBT and expand US ops?
My guess is that BBT would only be able to do a stock deal if they got a bargain basement deal (or got the stock price way up, real fast). Otherwise the stock would get killed. However, seems highly unlikely with other interested parties (PNC).
I do feel like BBT is not likely to over bid (given recent deals), so that makes me feel a little better.
RY stated back in Jan that they were either going to expand or exit the US market.....Please expand and buy us out.
I think the context was understood by everyone. He put a buy on a stock right before it completely collapsed (and would have gone bankrupt if paulson had let it).
What are you saying? He didnt know that would happen, so you cant fault him for the call?
I found your whole argument to be pointless.
if you got the jan 13 65 calls for $1.80, i would love to know where. the current ask price is $5.20 for those options.
i'm sitting on some april 46 calls. need something big to happen in the next few weeks. although i kind of feel like i'm playing with house money, since i had competely written them off when the stock fell to the mid 30's a couple of weeks ago.
i agree, this stock is way underpriced. the forward p/e does not even tell the whole growth story. just hope if comes back before my call options expire.
this lawsuit is nothing but pocket change for lvs, not sure why the stock is acting like they are going to get fined several billion.
not to mention, this is the way macau works. did jacobs really take a job dealing in the macau casino industry and not expect this? guy needs to get the program.
I agree the strategy I described is aggressive (with a large downside risk). However, given that the put call spread generates $7,000 in cash, BBT would have to drop down to around $22/share by Jan 12 before the trader would be in the red. The odds are that the price will not reach either $22/share or $35/share by Jan 12, thus I like this trade to simply buying call options. Just depends on how strong your stomach is.
You can write an option using a covered call strategy (any broker will let you do that), or you can write an option w/out owning the underlying stock (which is what I have described). So yes, I was talking about a naked put option. I didnt think I needed to specify covered or naked due to the context. Sorry.
I could be wrong, but I dont think this poster was really looking at a covered call. With $3k he wouldnt be able to pay his cell phone bill writing covered calls.
Correction... I should have said Jan 12 options in the above post. Forgot what year it was.
Also, the Jan 12 puts are selling at a bit of a premium to the calls. You could sell 40 of the Jan 12 $25 put for $2.50 and buy 40 of the Jan 12 $35 calls for $0.75. That would let you put your trade on while collecting $7,000, instead of laying down $3,000 out of pocket.
Most of the online brokers let you buy options, however not all will let you write an option (or sell an option). Sign up for Etrade or TD Ameritrade, and then fill out an option trading form. The cost of trading options is higher than stocks, usually around $10/trade and around $0.75/option.
So if you took $3,000 and bought Jan 11 BBT call options with a $35 strike price, it would cost $10 plus $0.75 times each option purchased. In this case each option is selling for $0.75 (or $75.00 b/c each option gives the owner the right to purchase 100 shares at that price). Thus, you could buy 40 call options for $3,000, and would pay about $40 for the transaction.
There is certainly money to be made in this trade, however it is a long shot. BBT would need to be trading above $35.75 by Jan 11, which would most likely take a buyout. Say the stock was trading at $40 by Jan 11, then your options would be worth $500 X 40 or $20,000.
Better strategy here if you are that bullish would be to sell put options and use that money to buy the call options. There are all sorts of option strategies, most are less risky than simply buying call options.
This is an interesting bet. It is a small amount of money (around $200k w transaction fees), but still big enough that I would doubt it came from a completely uneducated investor. Was this financed with put options? A hedge on a short position?
Kind of like putting $200k on one number on the roulette table. I picked up a few of these options today for $0.14, hope this guy knows something I dont. Although I certainly wouldnt risk any real money on this bet.
cant wait to see where the ball lands tomorrow.
Too big. You would be looking at an acquisition price similar to the BBT's market cap. They could merge, but that would mostly be a terrible deal for BBT, since FITB is a long way from seeing normalized earnings again.
I think BOKF is the play here, if they are looking to make one acquisition (and not a number of smaller ones). Much better company than CMA, however not really trading at a discount.