![]()
- Mulling Buffett's Stock Advice? Get in With REITs: Fund Managers
- So Now You Can’t Give Microsoft Away?
- Groupon Needs More Disclosure: Analyst
- China’s Steelmakers Set for Turnaround: Analyst
- Bulls Bet Silicon Motion Will Bounce
- Tobacco Stocks a Hot Dividend Play: Analyst
- Forget the Earnings, Disney’s Issue Is the Multiple: Analyst
- Drug Stocks Do Well in ‘Gloom and Doom’ Market: Analyst
- Unusual Volume: Taleo Jumps After Oracle's $1.9 Billion Offer
- Gas Prices in All 50 States Back Above $3 a Gallon
- Stocks on the Move Now: Caesars Entertainment Soars
- S&P 500 Earnings: Industrials Lead
- Stocks on the Move Now: O'Charley's Rallies
- Dow Rallies to Pre-Recession Levels: McDonald's Leads Since May 2008
- Unusual Volume Leaders: Gilead Sciences Spikes
- Stocks on the Move Now: Abercrombie & Fitch Tanks
- Groundhog Day Shadows the Stock Market
- Stocks on the Move Now: Amazon Dives
- The Secret Lives of Traders—Seeking the Next Hot Thing
- Markets Finally Get Greek Deal —So Where's the Rally?
- Warren Buffett: Stocks Will Outperform Gold and Bonds
- Greece Deal Fails to Convince, EU Demands More
- 'Mortgage Deal from Hell' Hurts Sound Borrowers: Bove
- Clint Eastwood: Super Bowl Ad Endorses No One
- Zynga, Hasbro Partner to Make Toys, Games
- New York Fashion Week Hits the Runway as Colors Pop
- Activision Beats on Earnings, Raises Dividend
MOST SHARED
- Stocks Looking Past Europe for a New Driver
- Canaccord, China's Eximbank Plan $1 Billion Resource Fund
- Jobs You Can Do Forever
- DBS Fourth-Quarter Profit Rises 8%; Tops Forecast
- Chart Patterns Suggest Pullback at Hand
- Australia's Newcrest First-Half Underlying Profit Up 17%
- Steelers' Antonio Brown Spends Super Bowl Week with Twitter Fan Turned BFF
- Mulling Buffett's Stock Advice? Get in With REITs: Fund Managers
- UPDATE: Massive Trend Just Getting Underway in Financial Services: Finerman
- LinkedIn Earnings Bode Well for Hiring and Social Media
MOST POPULAR
HOT ON FACEBOOK
What Options are Saying about Lehman
![]() |
What are the options trades in Lehman Bros. stock saying about the investment bank's future?
"The question, I think, on everyone's lips is whether we're seeing a Bear Stearns-like setup in Lehman Brothers," said Rebecca Darst of Interactive Brokers on CNBC's "Squawk Box." "And so we're going to ask ourselves, 'Is implied volatility in Lehman very high?' Yes, it is, even after yesterday's relative upside for Lehman shares, the options market is looking for 75 percent more price risk to Lehman shares over the next 30 days ... The preponderance of put trading in Lehman Brothers suggests that this risk lies to the downside..."
Puts are options that give the buyer the right to sell a stock at a certain price at a specific date in the future. Traders often buy them in hopes of using them to sell stock at above market prices at a later date.
Darst rebuffed speculation that options traders were betting on the ultimate demise of Lehman [LEH
Loading...
()
], and by doing so actually moving the market toward that end. Some argue that phenomenon helped seal Bear Stearn's fate. (See Darst's full comments in the accompanying video).
"As to the question of whether option traders have it out for Lehman in a way that some would argue they had it out for Bear Stearns, I would say, 'Not really,' because I think that a lot of the volume at these out-of-the-money, front-month put strikes is being sold as well as bought, and that was, that contrasts sharply with the setup we saw in Bear Stearns," she said.
The current options action suggests more of a straight out bet on Lehman's upcoming earnings report, she intimated.
"I think there's a paradigm shift, at least in terms of the brokerages, where it's not necessarily quite so unpatriotic to position in puts in a brokerage as it might have been a couple of months ago. I tend to agree with people in the market who would suggest that it's fair to suggest that Lehman Brothers shares may be trading at a lower value in three to six weeks from now than they are today, and you're not necessarily conspiring for the demise of the company, in doing so."
Lehman stock has fallen sharply on speculation it faces the same financial problems that brought down Bear Stearns. Yesterday Lehman slashed its risky debt holdings by as much as 25% and raised $8 billion in capital this year to shore up its balance sheet, according to an internal memo obtained by CNBC.
Lehman stock got a boost after Merrill Lynch [MER
Loading...
()
] upgraded its shares to a "buy" from "underperform" and Lazard's [LAZ
Loading...
()
] CEO Bruce Wasserstein praised Lehman, saying "(CEO) Dick Fuld is very able."
People with knowledge of Lehman's activity say that firm's officials have met with potential buyers of the securities in recent weeks including BlackRock [BLK
Loading...
()
] , which has purchased risky assets on the cheap from other firms like UBS [UBS
Loading...
()
]in the hopes of selling the securities for profit at a later date.








