Bank Failures Could Mean 79% Gains on XLF December 20 Puts
Aug 28th, 2008 | By Adam Lass | Category: Featured, Financial NewsThis week, FDIC chair Sheila Blair said the insurance fund might have to borrow to cover the nation’s bank failures.
The FDIC’s $53 billion simply isn’t enough to cover the assets held by the growing number of “problem” banks. The FDIC’s list has increased from 90 at the end of March to 117 in June. Total assets affected now stand at $78 billion.
If even a portion of the these banks go under, says Adam Lass in Taipan Daily, the XLF December 20 puts (XLF XT), which track the S&P 500’s Financial Select Sector, could gain of some 52%. A big number of failures could send these options up 79%…