“Practical Advice about Finance and Technology”

Once again the credit crunch finds a victim, this time it is no longer an average American but one of the biggest investment banks on Wall Street Lehman Brothers.  Yesterday (September 12, 2009) an emergency meeting was held between the Treasury Department, Federal Reserve, Securities and Exchange Commission and the CEOs of Goldman Sachs Group Inc, Merrill Lynch & Co Inc, JPMorgan Chase & Co and Citigroup Inc. All of them were at this meeting to decide one thing the fate of Lehman Brothers. Only two options are left on the table a bailout or the liquidation of the company. Either one of these is fine with me, but the issue arises that if there is a bailout then the banks that are providing the funds for the bail must do it without the backing of federal capital. This may cause additional strain on the investment banking community which is already in a very strained position. This bailout may even break other investment banks if there is another downward occurs in the economy.

The good news is that it is still possible to make money off of this misfortune. In the form of purchasing stocks (risky) or options.  I would personally use options. The prices are perfect for me there is a 20-40 cent spread (Strike – Option cost –share price= spread) between the LEH option and its current traded price. Honestly I don’t think that there will be a solution in the next 2 weeks. Hence the price will still fall.  

This is only my opinion but I trade by my gut.