To the Shorts of GS and MS…
If the Treasury provides capital to banks vs. going after the derivatives I would NOT want to be short MS and GS.
IMO, the short play on the financials is over. The Fed sees the problem, and will attack the problem.
The Treasury may take a dilutive equity position, but not one that would bring the stock crashing down. IMO, it will give it a boost from the current levels.
This is one of the reasons I am leaning toward GS common at or below 100. I do not think 85 will be broked downward during this downleg.
PS… Thanks Tom for pointing out the Put action. I may sell a (just one) Oct 90 GS Put, and pending the trading action, take common stock if I do not think the put will get exercised. (It is a small position because I still do not trust this market.)
