Excerpt from Wall Street Journal Blog…
The activity in the nation’s banks suggests that investors believe they are circling the drain, zombies needing only a blow to the head once and for all, or facing an imminent restructuring at the hands of the government. Once again, the market ended lower, and once again, the financial sector bore the brunt of the losses…
It should be noted, however, that some of the trading reflects upcoming options expiry Friday. “Today into tomorrow is a different scenario for banks because of expiration tomorrow. When they are down the whole month going into expiration, you have the continued leap down into expiration,” said Dave Rovelli, managing director of U.S. equity trading for Canaccord Adams. Options activity puts pressure on the underlying stocks as traders attempt to push an option to its strike price, possibly even by shorting the security — it’s not an accident, Mr. Rovelli noted, that these stocks hit a bottom on Nov. 20 and Nov. 21 of last year, just before expiration.
Link:
Four at Four: Banks Get Blasted — Again , David Gaffen, Wall Street Journal, 2/19/09