Diamond in the Rough — E*Trade Financial

Shares of E*Trade Financial ETFC are currently higher on the session by 2.11%, trading at $11.63. The stock was bludgeoned during the recent sell off, which took shares down from $16.66 to $10.66 in a little over a week (that's a -36% move). Prior to the sell off, shares had been rallying on news that the company's largest shareholder (Citadel) was pushing for a sale of the company. There were (and still are) also rumors that Carl Icahn had taken a stake in the firm to assist Citadel in getting its members elected to ETFC's board, thereby making it easier to get a sale done. Throw in the fact that trading volumes have skyrocketed over the past few weeks (ETFC and competitors alike have all issued statements that DARTs are at multi-year records) and you have a thesis that supports getting long E*Trade Financial. Technically speaking, the $12.00 is key. Once it is breeched to the upside, shares are clear to run higher, likely to the 50-day moving average (~$13.75). That would be an +18.22% move just on technical pressures alone. A measured move toward $16.00 would not be out of the question on a confirmation of a stake by Icahn, or further rumors of a sale. A fairly reasonable sale of the company could occur at $21.00, which would be a roughly 50% premium to the pre-rumor trade price. So…What's the Trade? Sign up for Benzinga's Options & Volatility Edge to find out.