I partially agree with J, the Fed definitely changed the rules. That being said, LEH has serious problems. The real problem though is that their books, and almost everyone else’s are so jam packed with fraud its impossible to know if they are tits up or not.
What you are betting on with LEH is a run on the bank. I have some Kaputs I bought when Bear went tits up and am still underwater on them. I’ll hold till expiration because I think there is a good chance a run will start on LEH, even a small one could be enough to spook the shareholders into panic selling.
Remember the Fed didn’t bail out the equity holders, it mostly bailed out the debt holders.
