Bear Sterns Sold At Fire Sale And Options Traders Poised To Profit!

The other shoe dropped this morning, with Bear Sterns being sold to J.P. Morgan Chase at a fire sale...just $2.00 per share!

Last week, Bear Sterns had announced that it had liquidity problems. That was code for "...we're broke and we need help."

In response, the Fed announced a bail out, with the Fed taking on a potentially huge liability.

This morning we learn that the entire firm is being sold-off, which translates into a stunning collapse for one of the world's largest and most venerable investment houses.

The central bank also made the extraordinarily rare move to cut its emergency lending rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately. This is an attempt to calm the markets.

The Fed is trying to demonstrate a commitment to insuring that financial institutions will have access to funds. Obviously, the credit crisis is very much with us.

The market has been selling off this morning, but right now it is off its lows. It's looking pretty ugly out there for investors and anyone with a long position has got to be questioning their next move.

This sort of volatility and uncertainty can be like a lunch buffet for options traders. Someone is always making money, even when the market seemst to be falling apart.

Think about how you want to take advantage of the pain out there.

Christopher Smith
TheOptionClub.com