(LEH) fell to an eight-year low according to Bloomberg
. Traders sold the stock on speculation that the fourth-largest securities firm in the U.S. could be sold less than its market value.
Just two weeks ago, Lehman’s CEO Richard Fuld said that the company didn’t need to be acquired. Fuld said, “With this franchise strength, and power, we can go it alone.”
But Lehman plunged as much as 11% during the day. Its shares reached a low point investors hadn’t seen since May of 2000. Further, options traders bet that there was more room to the downside. LEH’s July $20 puts gained 66% to $2.13.
LEH finished the session down 10.97% to $19.81.
For more context, see Professor Bennet Sedacca’s Has the Financing Window Shut? From the Bull Pen
: Are the banks poised for a rally? Wachovia
(WB) may be an option for a quick trade. Those with a high risk profile can attempt the upside using defined risk. From the Bear Cave
: Professor Sedacca summed up Lehman quite poignantly, “The case in point was when Lehman told the market that it didn’t need to take write-downs and didn’t need to raise equity. The week after this announcement it fired its CFO and raised capital it said it didn’t need, in order to pay for write-downs it said it didn’t have. It shows the company's inability to assess risk.”
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.