Spreading Rumors

You may have noticed that Countrywide’s stock price is down 20% this morning, into the $6 range. The price is down based on rumors of a credit downgrade and possible bankruptcy filing.

From a colleague of mine:

"One buddy, who works for a large investment bank, wrote to me and said, “Investors are literally buying thousands upon thousands of puts to bet on its demise - keep in mind every thousand puts is equivalent to 100K shares of stock - I have seen about 100K puts change hands myself - that's 10 million shares.”

Countrywide's fate has big implications for the mortgage market and the mortgage industry. There are a lot of eyes on this...