Looking for a potential short trade? You'll find it in the financial sector.If the sovereign debt crisis worsens, it could have a big impact on banks. European leaders will soon hold another summit, and it is likely that Italy will be the subject of this round of negotiations. However, it's also possible that Spain or Greece will go into crisis mode again.
Another problem facing banks is the LIBOR scandal. It has not yet been determined who is involved in falsely reporting interest rates or what the penalties will be for banks that did participate in this practice, but this is another weight hanging over the heads of big banks.
Finally, we have the issues of a sluggish housing market and an economy that is struggling to maintain growth.
In addition to a poor operating environment, individual banks each have their own problems. And while no one except the bankers themselves knows the extent of these problems, you can see why this sector makes a potential target for a short trade.
In looking for short trades, there are a number of factors to consider. It is best to start with a sector and then identify the companies with the lowest dividend yields. Traders who hold a short position are charged for the dividend by their broker. Shorting a stock with a high dividend yield could require an extraordinary return in order to profit after the dividend payments. There are several good candidates for short trades with low dividend yields among bank stocks. (more)
No comments:
Post a Comment