Monday, June 2, 2008

Lehman Teetering Again

I would love to be able to dismiss out of hand the various rumors that have been circulating about Lehman Brothers (LEH) over the course of the past few weeks. The fact is that Lehman seems to be unable to escape the Pig-Penesque cloud that has hung over the stock since the demise of Bear Stearns.

Lehman Brothers is down another 3% to 35.59 as I write this, with the prospect of another test of last week’s 35.00 support level coming soon. If 35.00 fails to contain the current round of selling, this could get ugly quickly and raise more questions about counterparty risk. I don’t like the looks of the LEH chart; clearly they are a long way from being out of the woods.


Bill Luby said...

For those that missed it, shortly after I put up this post, S&P lowered its long-term rating on LEH and moved the outlook to negative, taking LEH down to 33.58 in short order.

S&P on Lehman

Unknown said...

All the way out to October, the options tell a different story - they are far too cheap to reflect an insider belief that the company could go the way of BSC.

Anonymous said...

Bill, it's all about the earnings next week...and the quality thereof.

If Dick unveils a reasonably justifiable balance sheet and acceptable losses, watch the stock shoot back into the high 30s in short order.

The rumor was floating around that the LEH floor trader today went to the LEH post and put in an order for the firm of 500,000 shares.

DISCLAIMER: "VIX®" is a trademark of Chicago Board Options Exchange, Incorporated. Chicago Board Options Exchange, Incorporated is not affiliated with this website or this website's owner's or operators. CBOE assumes no responsibility for the accuracy or completeness or any other aspect of any content posted on this website by its operator or any third party. All content on this site is provided for informational and entertainment purposes only and is not intended as advice to buy or sell any securities. Stocks are difficult to trade; options are even harder. When it comes to VIX derivatives, don't fall into the trap of thinking that just because you can ride a horse, you can ride an alligator. Please do your own homework and accept full responsibility for any investment decisions you make. No content on this site can be used for commercial purposes without the prior written permission of the author. Copyright © 2007-2023 Bill Luby. All rights reserved.
Web Analytics