SBNY Signature Bank exposure to FTX

On December 21 Fitch Ratings revised Signature Bank's (SBNY) 'BBB+' Long-Term Issuer Default Rating (IDR) Rating Outlook to Negative from Stable.

On Jan 10, a team of analysts led by Ken Usdin downgraded SBNY Signature Bank to Hold from Buy, and slashed their target price to $124 from $185.

SBNY Signature Bank said that it had an exposure to FTX of less than 0.1%.

They also announced a reduction is crypto exposure, of which Jefferies analysts said:
“Signature Bank’s decision to shrink its crypto deposits by $8 billion to $10 billion and replacing with wholesale borrowings at 4.25% will drive a significant net interest margin reset in the coming quarters,”, which is a key profitability metric for banks.

Looking at the SBNY Signature Bank options chain ahead of earnings , I would buy the $75 strike price Puts with
2023-6-16 expiration date for about
$4.45 premium.
If the options turn out to be profitable Before the earnings release, i would sell at least 50%.

Looking forward to read your opinion about it.

עסקה סגורה: היעד הושג:

SBNY was trading at $61.37 today. Puts trading at $21.25 from $4.45 when i wrote this article.
This was a 4.77X gain. Even +500% at some point intraday!
In my group the strike price was $65 and the puts were up 7X when we closed.
Congrats for all of you taking this call!