I'm itching to pull the trigger on some Jan '05 FNM and FRE puts. In a year and a half you could have: Housing bubble pops Derivitive blow ups Accounting, SEC investigations For FNM, with the $70 puts at around $10, you could see those go up many times in value. The stock is only $5 off it's recent high. Who knows what could happen with FRE in a year and a half. Any other thoughts on FNM, FRE?
Well, I took the opposite position and went long a Jan 05 call. I'm up 30% so far. But that's what makes a market! As for a put, I'd be very nervous if investigations don't turn up anything deep at FRE. And I suspect they won't. This company has too many supporters to let it fail. The FRE board obviously demonstrated terrible judgement in the way they handled this affair, but I don't believe there are real serious problems.