U.S. options Traders are making more optimistic bets on banks in more than a year

U.S. options Traders are making more optimistic bets on banks in more than a year, speculation in financial companies will converge when the economy improves and analysts predict a growth of 21 percent profit next year.

The proportion of calls pending to buy the Financial Select Sector SPDR Fund makes off the sale increased by a third since October at 1.04 and reached 1.15 on December 6, a maximum of 13 months. The bet is the fastest growing ETF tracking the 81 lenders and brokers as JPMorgan Chase & Co. and Bank of America Corp. will jump 29 percent to $ 20 in June. The fund rose 2 cents to $ 15.50 yesterday, extending gains this year to 7.6 percent.

Financial stocks posted the second worst performance among 10 industry groups in 500 of Standard & Poor's in the past six months, his concern for the European debt crisis and the sustainability of U.S. economic recovery blocked profits. They have gained 7.2 percent in December, most of the 10 industries, after the companies reported third-quarter profit higher than estimated and the Federal Reserve announced a second round of purchases of Treasury to encourage growth.

"People in the options market are betting heavily that these actions will go up," said Chris Rich, chief options strategist at JonesTrading Institutional Services LLC in Chicago. "I'm seeing a lot of smart kids money to buy off-the-money call-in banks. When I see everyone marching in the same direction at the same time, that's something to take notice. Is a strong signal."

Loans, rates

Goldman Sachs Group Inc., based in New York, raised its rating on financial stocks to "overweight" from "neutral" on 1 December, saying the stock gains will be driven by loan demand and improving net rates of interest and return cash to shareholders through dividends and buybacks. signature economists increased their forecasts for U.S. and global growth in 2011 and predicted an acceleration in 2012.

"The financial upside offer attractive growth prospects improved fair assessment," the strategist David Kostin wrote in the report. "Stronger economic growth and an environment more favorable interest rates are positive for both loan demand and prices."

The cost of the options on the ETF has fallen to its lowest level since April. Implied volatility, a key indicator of prices of the options for options in the money, which expires in 30 days fell to 20.96 yesterday, more than half since the peak of this year of 46.46 in May.

Contracts rising

Total open interest to financial data calls for the ETF is up 13 percent from the options expiration last a month ago to 3.54 million, compared to 3,390,000 puts - and the number has been higher for calls for the past three weeks.

Open interest for betting the fastest growing, in June $ 20 calls, has risen to 252,516 contracts from zero at the end of October. The biggest gain of the day, for January of $ 16 calls, which rose to 384,796 from 148,977 in October, followed December $ 16 calls, which increased to 355.767.

Charlotte, North Carolina-based Bank of America, the worst performer in the Dow Jones Industrial Average in the past six months has risen 14 percent since falling to a minimum of 18 months on 30 November. This is the second biggest gain this month among the 30 Dow companies and nearly triple the S & P 500 Index performance during the same period.

Fee Caps

The prospect of increased regulation could hold the shares. San Francisco, Visa Inc. and MasterCard in Purchase, New York, owners of the two largest payment networks in the world, fell more than 10 percent yesterday in the U.S. stock market after the Federal Reserve proposes rules that could reduce the debit card interchange fees by 90 percent. Financial shares plunged in January after President Barack Obama proposed a reform of the financial sector.

Financial companies may be worth buying again after increased share repurchases and increased payments to landlords, according to Jeff Saut, who helps manage 240 billion U.S. dollars as chief investment strategist at Raymond James & Associates in St . Petersburg, Florida.

The Federal Reserve last month issued guidelines for supervisors to follow to determine if the banks are strong enough to boost dividends and stock repurchases. Comerica Inc. The Dallas-based bank which posted annual earnings over the financial crisis, the increase in quarterly profit to 10 cents per share on 16 November. Comerica also authorized the repurchase of up to 7 percent of shares outstanding.

Howard Atkins, CFO of San Francisco, Wells Fargo & Co., said in October that a dividend increase is a "priority" for the bank. JPMorgan CEO Jamie Dimon, Officer said he was "reasonably optimistic" the New York bank will be able to increase their payment first quarter of 2011 and that regulators were open to the idea.

"There will be a change in the banks," said Harvey Neiman, who oversees $ 22,000,000 including option strategies as president of Neiman Funds in Rancho Santa Fe, California. "The debt reduction and stabilization of the mortgage industry it all leads."