As readers of this blog know, I've been stalking E*Trade for some time. I first wrote about this stock back in November of 2007. It looked like a baby being thrown out with the bathwater. By my reckoning, there was still a vibrant brokerage business underneath the mortgage missteps. The stock has been a lot of places since then, all of them much lower than when I first started establishing a position.
It now seems that others have rallied to my cause. There are articles all over the web that E*Trade is going to get a bid from one of it's healthier competitors like Schwab or TD Ameritrade. Why? The same reasons I outlined nearly two years ago. The brokerage business is really sound(over 2 million accounts) and growing. They are slowly but steadily reigning in the mortgage mess at E*Trade Bank. Some are predicting that by year's end, someone will buy it. I can't dictate a timeline like that, but I would have to agree. Why wouldn't you want to acquire on the cheap (people have speculated a price of $3 or $4 per share) one of the most recognizable names in online stock brokerages?
This morning, I took a position in the October 2 calls. I got in a a price of 10 cents per call. At one point this morning, it was 5 cents. At another point, they were going for 15 cents. The volume in these calls has exploded recently, so a lot of people are expecting something to happen soon.
My plan for this trade is simple. I'm going to cash out as soon as the call is in the money. That means I'm betting that within the next 3 1/2 weeks, the stock will pick up about a quarter.
Only time will tell.
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