Strategist: More Volatility In Mortgage Sector

Lately, investors have seen an increase in trades among the mortgage lenders. What does that say about the financial services sector? CNBC's Sue Herera asked Stacey Briere Gilbert, Chief Options Strategist at Susquehana Financial.

Gilbert said looking at the financial markets from a "30,000 foot approach" -- she focuses on the XLF– the financial selects spider, the BKX– the Banking Index - and XPD- the Broker Dealer Index. They all show an increase in volatility buying.

Mortgage lenders, especially, have seen an increased number of put buyers (a bondholder's right to redeem a bond before maturity). That suggests an increased risk with those stocks.

The bottom line: The marketplace is positioning itself for increased volatility in the sector.

As we told you a few days ago, late payments on sub-prime loans have surged and a continued rise could hurt investors in mortgage-backed securities.

Contact Power Lunch

  • Showtimes

    United States
    Monday - Friday 1:00P ET
    Monday - Friday 18:00 CET
    Asia Pacific
    Tuesday - Saturday 01:00 SIN/HK
    Tuesday - Saturday 03:00 AEST
  • Sue Herera is a "Power Lunch" & “Nightly Business Report” Co-Anchor.

  • "Power Lunch" & “Nightly Business Report” Co-Anchor

Power Pitch

Kenny Polcari