Monday, March 12, 2007

Indy Mac (NDE), Accredited (LEND)

Back on February, 25 I featured the content of a Barron's column which examined lenders with high exposure to subprime and Alt-A. Among them: Indymac (NDE). Put activity has been enormously bearish today. For example, implied volatility on the March 30 puts is up to 108. Volume on the April 20 puts show 1374 contracts traded tpdau on open interest of just 34 contracts. For those who don't understand options, bets are being made that NDE will fall from its present level of $29 to $20 or below by the third Friday in April.

Accredited Home Lenders (LEND) April implied volatility has shot up above 210 today! This has become an area of interest for me to closely watch for the next subprime blow up. With risk now priced at ultra high levels in its options, will LEND be the next to head into single digits?

3 comments:

ken said...

yeah, i bot those LEND Mar Puts.....got scared because of the time frame this morning and bailed with a 27% profit....can't be upset with that...or can you? it could have been a 300% profit....oh well....:)> I am happy thanks Jim...

Jim K said...

'see too soon' is not a bad rule in my book especially when expiration is staring you in the face. congrats on the 27%!

nathan said...

I have LEND jun puts up 90% so far...today would be a great day to sell those, but I'm feeling greedy today.