MarketOpen: Week of 6/28 - 7/2

Monday; June 28th, 2021 - Hello everybody! Welcome to the weekly MarketOpen Community Thread! Here, you’ll find an open thread discussing the week’s Unusual Options-Flow of some of the most anticipated stocks this coming week. Below, I’ll be doing an overview of some of the week’s most Bullish plays, look at exactly what the Whales were targeting, and I’ll be sharing two trades I analyzed in today’s session. MarketOpen Threads are posted every Monday night or Tuesday morning, while we have our MarketEnd thread every Friday. Make sure you check back then to learn about some of the week’s most traded stocks, where I’ll also go over another two trades I take in that session. Most of these are simple pictures, please see disclosure below.

Remember: This is NOT financial advice and nothing I say or do should be replicated without doing proper due diligence. Please only invest whatever you are capable of and willing to lose.


Eric Rosengren, President of the Federal Reserve Bank of Boston, calls Tether a threat to the U.S. Financial System

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In recent news surrounding the Financial sector, the President of the Federal Reserve Bank of Boston, Eric Rosengren, has said that Tether poses a threat to the United States Financial System, being a new “disruptor” for the short-term credit market.

The reason I talked about Tether and stablecoins is if you look at their portfolio, it basically looks like a portfolio of a prime money market fund but maybe riskier… Tether has a number of assets that, during the pandemic, the spread got quite wide on those assets. I do worry that the stablecoin market that is currently, pretty much unregulated as it grows and becomes a more important sector of our economy, that we need to take seriously what happens when people run from these type of instruments very quickly.”

- Eric Rosengren, President of the Federal Reserve Bank of Boston


The Federal Reserve has given Banks the thumbs-up as all 23 Lenders have easily passed their 2021 Stress Test; Dividend increases and buybacks are on their way

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The Federal Reserve has released their results to the recent Stress Test they performed on the U.S. Banking System. All twenty-three lenders have passed the 2021 exam at “well over the minimum” required capital levels during a hypothetical Economic shutdown. The scenario, which looked at the potential of a “severe global recession”, showed massive strikes at the commercial real estate and corporate debt holders, including peaks of unemployment at 10.8%, a 4% drop in gross domestic product, and a massive drop of 55% in equity prices. The industry would post a loss of $474 Billion, according to the Federal Reserve. However, capital requirements are more than double the minimum amount, which casts a massive safety net we didn’t have before.

So what exactly does this mean? Well, it means that The Great Bank Buyback of 2021 is beginning. After The Great Recession in 2008, The Dodd-Frank Act was put into effect in an effort to reform the banking system. These regulatory stress-tests are a result of that Act, which was made to prove a Bank can survive the Federal Reserve’s hypothetical Doomsday.

Share buybacks are one of the most Bullish plays that show strength in company financials. This combined with an increase in dividends that banks are beginning to give out makes plays on financial institutions extremely Bullish to an unimaginable extent. Over the next six months to a year, there will be massive Catalysts that will make way for large institutional movements. Banks make money off of lending, and businesses need lenders to grow and succeed in this current environment. When interest rates go up, the profit spreads even wider. Banks are now able to return capital to shareholders without restrictions, which is different from last year, where the banks were forced to conserve capital and still serve their clients during a pandemic, in which the Federal Reserve limited the banks’ payouts to their shareholders. Buybacks were completely halted at first but later erased. Dividends, however, were capped at a level equal to profits over the prior four quarters. Had restrictions not been in place, many of the larger banks would have been able to maintain previous payout levels regardless of the pandemic, thanks to a profit-boosting surge in trading and deal-making activity.

The Federal Reserve has said it expects banks to wait until after 4:30 P.M. on Monday to begin releasing their buyback and dividend plans. Tens of billions are expected to be paid out to shareholders. Banks will be able to boost their payouts after June 30th.

So, let’s take a look at the Unusual-Options Flow, shall we?


The Top Most Important Banks to be Watching

SPDR S&P Bank ETF ($KBE): No Expiration, >$1,000 Premium, Ask-Side

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SPDR S&P Regional Banking ETF ($KRE): No Expiration, >$1,000 Premium, Ask-Side

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Financial Select Sector SPDR Fund ($XLF): No Expiration, >$10,000 Premium, Ask-Side

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Citigroup Inc. ($C): No Expiration, >$10,000 Premium, Ask-Side

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Bank of America Corp. ($BAC): No Expiration, >$10,000 Premium, Ask-Side

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JPMorgan Chase & Co. ($JPM): No Expiration, >$25,000 Premium, Ask-Side

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US Bancorp ($USB): No Expiration, >$25,000 Premium, Ask-Side


Alright, Apes! That is all for today! I hope you enjoyed this segment of MarketOpen, please be sure to stick around for more this coming Friday! Below, you can find two links to the Analysis documents I did for this Monday’s session.

  1. $DVN 2021-07-30 C $30.00

  2. $PLTR 2021-07-30 C $31.00

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