Time to Play a Beaten Up Brand Name in the Financials

Sean McLaughlin
June 15, 2018

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.

LOL.

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.

Godspeed.

~ @chicagosean

Subscribe to All Star Options before prices go up soon!

Filed Under