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I have WDC and QBE in my potfolio. Should I sell both (at a loss) and switch to buying May European out of the money calls in preparation for a WBC price rise and a healthy dividend? That transaction would return a profit after losses on WDC QBE.
A: Thanks for the question.
It is really hard to answer your question in isolation – that is, I don’t know about the rest of your portfolio, the respective amounts you have in both WDC and QBE – and for that matter, at a higher level, your investment objectives, particular needs, and financial situation.
That said, I would prefer to own WBC to either QBE or WDC – I think there is still some value in the Banks, particularly on a risk-adjusted basis.
For the record, FN Arena says that the broker consensus target price on WDC is $11.72. Sentiment is mildly positive at +0.3 (-1.0 most negative, +1.0 most positive). For QBE, the consensus target price is currently $13.06, sentiment is +0.4. Yesterday. UBS upgraded QBE to a “buy”, and Macquarie downgraded QBE to “underperform”.
Hope this helps.
