BNP Paribas and the bump in the road

Walking Away

Options traders see $5bn of fines as little more than a bump in the road for shares of BNP Paribas.

Bloomberg News reports that the price of call contracts that pay should the stock rally in the next nine months is higher now relative to bearish bets than at almost any time since 2010, according to data compiled by Bloomberg.

BNP Paribas stock has slumped 8.8% this year, the fourth-most in France’s CAC 40 Index and leaving it cheaper than 36 constituents in the gauge.

U.S. authorities are seeking what would be the largest penalty for sanctions violations after probing BNP Paribas’s dealings with countries including Sudan and Iran, a person with knowledge of the situation said this week. With the uncertainty over the size of the fines lifting, the stock valuation will rebound, Karim Bertoni of de Pury Pictet Turrettini & Co. said.

'When the news comes out, it’s kind of a relief because then at least you can put a line in the sand and you understand the situation', Bertoni, who helps manage $3.3bn at de Pury Pictet Turrettini in Geneva, said by telephone. 'The fact that you erase the uncertainty is taken well by the market'.

To access the complete Bloomberg article hit the link below

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