DB Is Headed Down to $5 – Here Are My New Put Recommendations

I hope you all had a great Fourth of July – I’m finally back in the office after a much-needed vacation with my family.

To start things off right, I’m sending out a quick trade alert.

This morning I’m updating my targets on DB, which has continued to collapse since the last time we checked in. (The market is finally catching up with what Sure Money readers knew months ago.) The overall European banking sector is under serious strain after Brexit, with the biggest concerns remaining Deutsche Bank, still buried under debt and plagued by scandals, and the Italian banking system. Since the beginning of the year, DB has lost over 45% – it’s trading below $13 as I write this. Sentiment around the stock is falling apart and in my view, it could get to $5 – or even below – very quickly.

So here are my new puts….

My Updated Put Targets for DB

  • BUY DB January 20, 2017 $5 puts (DB170120P00005000)
  • BUY DB January 19, 2018 $5 puts (DB180119P00005000)

As always, I prefer puts as a less risky way to play the short side. Right now, I’m looking at a couple of new puts that are attractive based on current prices. The first has an expiration date in January 2017, the next a year later in January 2018. It’s up to you how to play this based on your expectations, but in my view both are good bets.

As I write this, the DB January 20, 2017 $5 puts are trading at around $0.20 and the DB January 19, 2018 $5 puts are trading at about $0.53. Both are a cheap way to short and very profitable.

If DB falls to $5 anytime between now and January 20, 2017, you’ll make at least 343% (and over 400% if it drops earlier, which it very well may).

If you choose to buy the longer-dated puts (Jan. 19, 2018), the profits are a bit less spectacular, though still solid – you’ll make at least 133%, with a chance at the high 200s if the stock reaches $5 before January 2018.

If you bought the October 2016 and January 2017 puts I recommended earlier in the year, you already had a chance to make at least 277%. However, if you’re still holding onto those, don’t get rid of them just yet. Add the new puts to your old position.

  • HOLD DB October 21, 2016 $11 puts (DB161021P00011000)
  • HOLD DB January 20, 2017 $10 puts (DB170120P00010000)

Sincerely,

Michael

28 Responses to “DB Is Headed Down to $5 – Here Are My New Put Recommendations”

  1. Right now I am just trying to learn how to “talk the talk” with respect to options . . . “walk the walk” comes later.
    Re: “If DB falls to $5 anytime between now and January 20, 2017, you’ll make at least 343% (and over 400% if it drops earlier, which it very well may).”
    How do I make any percentage if DB goes to $5.00? How did you arrive at the percentage(s) in your missive?
    It’s a real treat to read someone who reads outside his discipline.

  2. Lloyd; options don’t work same as the underlying, shares of DB in this case. Even if shares drop only to 8 dollars you will still make money as puts will increase in value from what you purchased them. Options have time and intrinsic value. Read up on options 101 and you will understand.

  3. Jarvis Faircloth

    Shorted DB when I received this message. Shorted January 2017 and August , based on the , this could happen in a hurry. The DB has only gone up since then. 12 analistest are calling for $19 and $20
    this year. Whats is you take on that.

  4. Hello Folks Have been reading and doing a bit figuring ,, from my calculations and understandings I calculate the jan 2017 $8 strike to be worth $3.00 plus depending when DB gets closer to $5.00 ,,,, at about $.50 per right now Aug21 2016 is this not a 6 bagger hands down ,,, ,,Yes it is a bit more costly but Looks to me to be more lucrative than the % maybe you get at $5.00 strike ,,, Have I missed the boat here ,,, Think Ill try few options and buy the $10 and $8 strikes ,,, no need to be a hog and get slaughtered

  5. In retrospect to the reading I have on these articles which are Excellent ,,, My Question is how can a Bank(casino) ever get over $50 Trillion Insurance POLICIES (CDS’s) Derivatives and a market value under 14Billion? Some one said DB was arguably the largest world bank but JPM is worth over $240 billion with CDS’s of the same over $50 trillions ,,,, Is my math miscompatulated or are the numbers I see not over inflated but if true then THE END IS VERY NEAR?

  6. Lloyd, I suspect he just left some of the paragraphs unchanged from when he was recommending $10 puts, which are worth at least $5 if the stock drops to $5. His percentages make sense if you’re looking at the $10 puts and prices somewhere inside the bid/ask spread.

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