Equities traders have endured one of the most inauspicious starts to a year in ages. What was supposed to be a year of positive growth and high expectations has turned into quite the antithesis. Stock markets have been rocked by China weakness, crumbling stability in the Eurozone and the hapless predicament of emerging market economies.

My mind harkens back to the Fed decision on December 16, 2015 and I cannot help but think that perhaps the Fed got it wrong to hike rates amid a brewing global crisis: The Emerging Markets Meltdown. Nonetheless, a 25-basis point rate hike was hardly substantial enough to warrant calls for a global meltdown, but China weakness is certainly the wrecking ball that these economies cannot withstand.

News has recently broken of the dire economic predicament in Germany where industrial production has slipped to ZERO. And worse than that, consumer confidence in Europe’s premier economy is declining fast. This does not bode well for the EU, the eurozone, China or emerging market economies. Germany is one of the most important cogs in the wheel and France is heavily reliant on Germany for its own economic prosperity.

The Nuts and Bolts of Societe Generale

The shoddy performance of Societe General of late has a lot of investors in Paris deeply concerned. A period of successive daily declines in 2016 has traders going heavily bearish on the stock. However, there is light at the end of the tunnel as Morgan Stanley has given a future price target of €49.60 to the stock. That would certainly be a big step up for the company which was previously viewed in a neutral light by Morgan Stanley – one of the most respected financial investment enterprises in the world.

Citigroup Inc is also bullish on the stock with a €52 price target and a positive buy rating. Yet another ratings agency – Credit Suisse was even more generous with a price objective of €58.10 and a positive buy rating too. In other upgrades/downgrades announcements, BNP Paribus rated Societe Generale with a neutral rating and they announced a price objective of €49. Altogether the stock is a hold/buy over the long-term with 6 major ratings agencies rating it a buy and 6 a hold. On average, the price target for the stock is €50.89 – well above its current trading range of €38.30.

Important Points to Bear in Mind

• The 50-day MA is €42.39
• The 200-day MA is €42.92
• The 52-week low is €32.45
• The 52-week high is €48.77

Societe General is primarily in the business of asset management, investment banking, retail banking, corporate banking and insurance. The company is operational in 76 countries.

The Takeaway:

The short-term trend is clear: Consider binary put options on Societe General stock. Medium-term to long-term the analysts are calling for stock price increases in which case you’d be looking at call options. With weakness in Germany spilling over into France and the eurozone, coupled with China weakness and an EM economy rout the best course of action at this time is put options.