Contrarian trade in the financials

[streetman]

i have yet to do a lot of research on this vague PLAY.

im thinking maybe some of you already have and can give me ahead start. As we all know the financials have been battered. all of it stems from liquidity problems and exposre to bad loans. I was thinking of a posible investment in OptionExpress/tradestation or something of the like(though my preference is something more on the options/futures side). my reasoning is contingent on the strength of the balance sheet and previous business practices that might make it exposed to BSC type issues.

Option Express OXPS... logic: without doing any research my HUNCH would be that this company primeraly deals in retail order flow and market making operations... of which most positions will be short term in nature. If this is true and they have no major exposure to the problems the big financials are having this makes the fall in lock step with them a FALSE move.

In addition i know that option volume has been increasing year over year by a large amount... looking for the numbers.

they also have a descent brand... i know of them but have never used them.

if this is true it means that OXPS is most likely still a good growth play at an AMAZING price b/c MR.Market threw the baby out with the bathwater.

i know futures volume in emini's is also growing a lot... so any other company weighted towards derivatives is a good growth sector.

I also checked out quantifiable edges blog.. great site... a note on how poorly UBS is doing relative to its pears. posible spread trade hear... long OXPS short UBS... with the thought that if we have not hit the bottom yet in financials that maybe people will atleast realize the over reaction. (on negative side you might have to sit on this trade for a while... and 1.5% yeild on OXPS is crushed by the payout on 4.5% UBS dividend)

THanks... please look this up... i think if my hunch is true we have a great trade in the making

Damian

[streetman]

SOME OPTIONS DATA:

The latest CBOE figures show that in January and February:

The iShares Russell 2000 Index Fund (NYSE: IWM) has averaged 395,383 daily options volume, a 97% increase from the same period a year ago.
PowerShares QQQ (NASDAQ: QQQQ) averaged 268,000 in options trading per day, up 61% compared with the same time last year.
The SPDRs (AMEX: SPY) averaged 337,000 daily options trades, up 242%.
The next biggest was Financial Select Sector SPDR (AMEX: XLF), which saw a 1,200% leap compared with a year earlier. But it represented a much lower level, about 71,000 trades per day.

[streetman]

another thought along the same line....

financials will improve in the near term or they wont...

if more BSC issues arise the fed will keep backing up the system with liquiditity.

they are going to lower fed fund rate,  lower discount window rate, and buy loans.... last ditch print money

this all points to inflation... possibly run away inflation to save this sector

if the financials improve then i feel its almost a null point b/c fed has still been slashing rates... we all know the fed historically over shoots... this points to inflation

for the two above i am thinking about buying into TIPS on dips and retracments to play inflation directly and possible be open to a windfall profit if this really is doomsday(hopefully not)

any comments are appreciated... especially people who think im wrong/dumb!

Damian