Options trading in HSBC looks bad. Really bad, according to Jon Najarian who compares it to Bear and Lehman’s options activity before these big banks stumbled. “It’s falling off a cliff,” he says. “They are buying puts at the 50-strike, 45-strike, 40-strike. I’ll get real scared if they start buying the 20-puts because that’s the kind of pattern we saw in Lehman and Bear. They (institutional investors) are buying 50% out of the money puts.” Najarian urges investors to keep an eye out.
From our vantage point HSBC has little news of importance as of late. There will be no magic after Obama takes office as President of the United States. In fact 2009 looks to be worse than 2008, leaving HSBC without a viable plan to offset losses in the U.S. and U.K.