So JC calls me up today and drops this in my lap on Deutsche Bank $DB:
I think this is it. I think the bottom is in. Either that or it’s a zero.
More professionally, JC is quoted in Barron’s:
When you talk about the fundamentals of these banks, then people get really scared, but there comes a certain point where that horribleness gets priced in.
I’m rarely, if ever, a bottom-feeder in the stock market. But knowing that $DB is just too big of a name to allow to go bust (I think regulators learned their lesson with Lehman Brothers?), it seems like a low-risk, potentially high reward play to dip our toes in the water in a risk-defined play to participate in a rebound.
The volatility being priced into these options isn’t too bad, considering the nearly 50% cratering the stock has endured since January. And the 30 million shares traded back on May 31 where the stock made new 52-week lows then finished near the high of the day sure has all the hallmarks of a capitulation day.
As such, with the stock pulling back to around $11, I’m wading in here, buying August expiration 12-strike calls at 35 cents.
This trade is either a zero, or a hero. There is no in-between. If the bottom is indeed in, I’ll probably look to take at least partial profits if $DB makes it back up to the $14-15 before August expiration.
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