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« Randgold Resources Limited An Entry Point Approaches | Main | Overbought Banks Worth a Punt »
Monday
Aug102009

U.S. Bancorp Fit to Drop

USB Chart 10 August 09.JPG

As we wrote yesterday U.S. Bancorp (USB) appeared to be dramatically overbought so we ventured out of our precious metals bunker and purchased a few PUTS on USB. We bought the September 2009 series with a strike price of $22.50 for $1.00 per contract (UEEUX).

As one of our readers commented its nice to 'short the enemy' even though we are precious metals bugs.

As we can see from the above chart the RSI is well above the '70' level which usually indicates that a correction is nigh. This bank has also gained in value by about 50% over the last month or so rising from $16.50 to $23.42 which has been a terrific run. However, it is a very steep climb and could be too far too fast for USB, thus tempting those investors with profits to lock them in.

Anyway we will keep a close eye on the action and formulate an exit strategy shortly. We normally hope to make a 100% on a trade so we may well place a sell order at that level while we are chewing on it.

US Bancorp has a market capitalization of $44.01 billion with 1.91 billion shares outstanding, a P/E ratio of 27.98 and closed down $0.23 today at $23.02. US Bancorp trades on the NYSE under the symbol of USB.

Your thoughts are of course most welcome.

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Reader Comments (3)

I like the cut of your gibe.  Good work.

August 11, 2009 | Unregistered CommenterP

Off to a nice start, but these options are volatile so wear your hard hat at all times

August 12, 2009 | Unregistered CommenterGold Prices

sorry my mistake...I got Aug 11th but failed to scroll down far enough to see the second article..my apologies

Jim

August 12, 2009 | Unregistered Commenterjames purcell

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