Profit Hedges Get Expensive at SocGen, Credit Agricole: Options
Bloomberg:? Turmoil in Russia and Greece, regulatory scrutiny and the collapse of oil is weighing on the minds of traders already smarting from an earnings report that sent BNP Paribas SA plunging last week. A weak economic outlook in France is adding to concerns, says SVM Asset Management Ltd.?s Hugh Cuthbert.
With one day to go before results, contracts that protect against declines in Societe Generale SA have climbed near an almost two-year high versus bullish ones, according to data compiled by Bloomberg. Bearish options on Credit Agricole SA are also close to a peak before the firm reports earnings Feb. 18.
?The whole issue of France itself is rearing its ugly head again,? said Cuthbert, who helps manage about $750 million at SVM Asset Management in Edinburgh. ?The economics simply don?t look very good, and banks are of course exposed to that. Any form of Greek exposure right now is too far up the risk scale for me.?
France?s economy hasn?t been keeping up with the rest of the euro zone and is expected to expand at a pace of only 0.8 percent versus 1.2 percent for the currency bloc this year.
The nation?s banks aren?t keeping up either, failing to match this year?s 9.9 percent rally in the CAC 40 Index through Tuesday. Societe Generale advanced 0.2 percent at 1:50 p.m. in Paris, while Credit Agricole lost 0.6 percent.
A spokeswoman at Societe Generale declined to comment on the options trading, while a call and e-mail to representatives at Credit Agricole were not returned.
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