Trading at CHF 13.44, Credit Suisse shares are down 38% since the beginning of the year and 51% from the highs in August 2015 when it was trading at almost 28 francs per share.
We know the reasons for the decline: additional provisions for risky loans, declining activity of customers, unconvincing new management team.
However, the book value per share is CHF 22.74, which means that the stock is trading currently at a discount of over 40%, which offers an interesting opportunity for -value- investors. An alternative to buying shares would be selling puts, knowing that current conditions are good: high volatility and low prices.
For example, an investor who would take the risk of buying shares in Credit Suisse at a price of CHF 12.00 in December 2016 would earn a premium of CHF 1.26 per share, i.e. more than 10% over 7 months, with a break even at CHF 10.74.
At a time when investors are complaining of low interest rates and the lack of investment opportunities, this options' strategy provides strong profitability with downside protection. Warning: strategy to use only by sophisticated investors.
This is not a recommendation but just our opinion. Please consult with your financial advisor before investing!