Jon Najarian Gives a Trade Idea Based on the Big Bank News

Jon Najarian Gives a Trade Idea Based on the Big Bank News


bank earnings

Jon Najarian stopped by the set of Making Money with Charles Payne today to give viewers a few trade ideas based on the recent banking news that has taken the market by storm.

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Managing Jon’s KRE Put Position

Roughly a month ago, Jon Najarian took out a put position in the KRE banking sector. At the time, the KRE (SPDR S&P Regional Banking ETF) was trading in the $60’s. Now, the KRE has traded down the low $40’s. Jon Najarian says now is the time to buy.

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Jon Najarian: KRE is an “Oversold Buying Opportunity”

Asked by host Charles Payne,

“Do you think there will be a point where the banks fall so much that they actually start to look attractive from a buying standpoint?”

Jon said,

“I think it happened this morning, Charles.”

Source: Google

Jon reviewed the chart for viewers, covering the moment in this mornings trading session where shares of KRE turned around. It was the same moment where KRE option traders initiated a roll down.

VOCAB CHECK — Roll Down: A roll down refers to a trading strategy where option traders sell-to-close a position in a specific security and simultaneously buy-to-open a position with the same directional bias in the same security at a farther-from-the-money strike price, allowing the trader to take money off the table while maintaining some exposure to the trade.

“That happened around the $42-and-a-half level — now its up to $46. […] We could see a rebound from an oversold position.”

Jon Najarian’s Trade Idea in the KRE: A Bullish Call Spread

To capitalize on the move in the banking sector, Jon Najarian suggested that viewers could use a bullish call spread, which allows traders to take on leveraged positions while limiting risk (by selling short options against long options at a 1:1 ratio). The specific call spread Jon pointed out:

A long $45 strike call against a short $52 strike call in KRE. “Better than a two-to-one risk reward.”

During Jon’s appearance, he also talked about other ways to take advantage of the news. For instance, when the government said it would back SVB, Bitcoin took off. Jon said traders could use GLD bullish call spreads or even use the CME’s Bitcoin futures exchange to buy at-the-money Bitcoin options in order to benefit from the market exuberance around the bank bail out. 

For more from Jon Najarian, catch his next appearance LIVE on Tuesday, March 21st, when he joins Liz Clayman for The Clayman Countdown, which airs from 3PM-4PM EST.

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