Bad news out of Fannie Mae yesterday, and you could probably guess what it relates to. Yep, bigger than expected credit losses, this time obscured by some fancy-pants accounting. The stock fell hard this morning, but it bottomed out around 37 and has bounced now back up to 41, a good short entry.
Trade ideas:
- You could buy the Jan 40 puts and sell the Dec 40 puts to create a nice one-month calendar for a net debit of $1.15.
- Or if you want a more theta-positive play, just sell the Dec 50 calls and buy the Dec 55 calls for a $0.60 credit.
- And if you’re already long the stock for some reason, this bounce might be a good time to get out.
As always, with these bonus trades you should do your own due diligence, you will lose money, etc.
