Washington Mutual

Wow! Wa Mu (WM) has really gotten hammered in this whole credit crisis thing going on. It's hard to believe that this stock is trading around $5 per share. It seems really cheap to me. Sure, the company still has a lot of debt and maybe a few hidden landmines, but they have also raised a ton of liquidity lately and they have close to $10 per share in cash on their books.

It sure looks like a stock that you just buy and hang onto until things improve down the road. This is another stock where you could sell some covered call options on the stock, if you already owned WM, and generate some income while your waiting for things to improve. I saw that a January 2009 call option with a $10 strike price was selling for about $1.05 bid side. If you hold 1,000 shares of WM, you could write 10 call option contracts and get paid $1,000 to wait for things to turn around. When those options expire, you can then write some additional options on the stock and keep doing this until you have either recovered your entire basis that you paid to buy the stock in the first place.

Sooner or later someone is going to come along and buy WaMu outright because this stock is just trading way to cheaply right now.