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Will Merrill Keep The Party Going?

Both JP Morgan and Merrill Lynch report earnings on Thursday while Citigroup reports Friday.

Should you buy beleaguered bank and broker stocks ahead of earnings? You might be surprised what the options action suggests.

According to Susquehanna financial market strategist Stacey Gilbert, the options market is pricing in volatile moves for financials with traders speculating that Merrill Lynch could move as much as 14% in either direction. “That is a huge move,” she says on Fast Money.

Meanwhile, options traders think Citigroup and JP Morgan could pop or drop 9%. That’s a considerably wider range than in years’ past. “JP Morgan moved more than that on Wednesday,” adds Gilbert. “Volatility is definitely here.”

Implied Moves For Financials

Options Predicting: Past Average Move

MER +/- 14% +/- 3%
C +/- 9% +/- 2%
JPM +/- 9% +/- 3%

Source: Susquehanna

If you're looking for a trade Gilbert has some ideas. "If you think the moves are going to be larger (than those listed above) I’d recommend buying the straddle and if you think they're going to be smaller, than sell the straddle,” she counsels.


And that leads to our Charles Schwab Question of the Day!








For more of Stacy Gilbert's analysis please watch the video.















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Trader disclosure: On July 16, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (GS), (MSFT), (USO), (WMT); Adami Owns (C), (AGU), (GS), (INTC), (NUE),(BTU), (MSFT); Najarian Owns (AAPL), (NOK), (TSO), (XLF), (GS); Najarian Owns (ANR) Puts; Najarian Owns (CSCO) Calls, (PRU) Calls, (SLB) Calls, (UYG) Calls, (YHOO) Calls; (WLT) Calls; Finerman Owns (GS); Finerman's Firm Owns (MSFT), (NOK), (SUN), (TSO), (TWX), (VLO), (AXP), (M); Finerman's Firm Owns (TGT) Calls; Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Long SPX Index Puts; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM); Charles Schwab Is A Sponsor Of "Fast Money"

Gilbert Owns (BAC) Calls; Susquehanna Capital Group Is A Market Maker In (BAC), (BBT), (C), (GOOG), (IBM), (INTC), (JPM), (MER), (MSFT), (XLF), (WFC)