Wednesday, February 4, 2009

SunLife Insurance Straddles

Sun Life Financial has been beaten down considerably lately. The company reports February 9. Here is a preview of the straddles. Current stock price is 19.86.

These are some straddles.

1. For the US:

2. On the TSX:

Results obtained with the online straddle calculator at Nexalogic.

The moves required are roughly 15% in the US and 11% in Canada, which is quite reasonable at this point with over two weeks till expiration. However, the volume of options is still quite low. This is an interesting play for next week.

SunLife is increasing its efforts to expand its U.S. annuities and life insurance businesses through internal growth, and intends to make acquisitions in the United States.

Sun Life is Canada's No. 3 insurance company, and recently sold its stake in mutual fund company CI Financial for C$2.3 billion (USD $1.9 billion). The company will be using the funds to buy assets that are cheap due to depressed valuations in the financial services sector.

Approximately 60 percent of Sun Life's business is based in Canada, where the insurance industry is very tight and dominated by just three players.

The company is targeting its U.S. annuities and individual life insurance businesses for expansion, and will push C$40 million into the business to boost internal growth beyond 2009. The company offers financial planning, health insurance, life insurance, critical illness insurance, and other protection and wealth accumulation products and services to individuals and corporate customers.

Stock chart:

Disclaimer: I have no affiliation with Sun Life, nor do I own any shares.

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