Western Alliance Bancorp (WAL) stock is up over 5% today to $34.92 now that Silicon Valley Bank has been rescued by the FDIC and bought over the weekend by First Citizens Bancshares (FCNCA). However, despite that good news, WAL stock option premiums are still high, which might indicate the bank stock could be volatile. This is good news for income investors who short its puts and calls.
We discussed this issue in our last article on the Phoenix-based regional bank stock on March 14 in our article, “Western Alliance Bancorp Is Up Big on Citadel Purchase of 5.4%.” In the article, we showed that WAL trades well below its tangible book value per share (TBVPS) of $40.25, from last quarter. In fact, even with a 20% haircut, the TBVPS might be $32.40 at the end of March. This still makes the stock cheap at just 1.08x adjusted TBVPS.
