Merrill Lynch (MER, $30.12, down $1.00) started the morning in positive territory but is now down over 3% as we head towards the closing bell. According to a report, Merrill is seeking $5 billion for its 20% stake in Bloomberg, a price some analysts say is lower than what Merrill could fetch in the open market. Bloomberg has the right of first refusal over the proposed sale which could make it difficult to attract rival buyers.

Merrill also holds a 49% interest in BlackRock (BLK, $163.80, down $5.77) which is worth $12 billion that it is also trying to sell. The company is looking to sell only part of its investment in BlackRock because it wants to maintain a strategic alliance with the firm.

These moves are needed as Merrill tries to raise capital to offset as much as $6 billion in expected write-downs for the quarter. The stock dropped below $30 today and is struggling to close above that level. The July 32.50 puts (MERSA, $3.20, up $0.56) are up over 20% today and 50% from an entry price of $2.15.

Rick Rouse
Rick@OptionsMentoring.com