Option update: Washington Mutual (WM) volatility up on exposure to California homes

Posted Oct 22nd 2007 3:15PM by Paul Foster
Filed under: Washington Mutual (WM), Options

Washington Mutual (NYSE: WM), the third-largest mortgage lender in the U.S. with consumer and business banking, has a high exposure to the California economy. WM is recently trading at $28.93. Goldman Sachs (NYSE: GS) says, "California homes are 35-40% above the price range implied by current and forecast economic conditions (compared to 13-14% over-valuation nationally). As of August the median house price in California was $589,000, but economic conditions support prices between $350,000-$380,000; material price declines are likely, in our view." WM overall option implied volatility of 43 is above its 26-week average of 32 according to Track Data, suggesting larger price fluctuations.

Daily options update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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