With AIG down another 6% pre-market, I thought I'd share an update regarding the volatility of AIG after the 100%+ jump we saw in August (hint... it's not letting up). First, as I detailed last month regarding the the volatility in AIG share price:
This type of volaility for AIG shouldn't be all that unexpected. After all, AIG is no ordinary stock. It is just a binary option on the continued bailing out of an entity currently too big too fail. At the end of the day, AIG should be worth $0.00 (i.e. nothing) or a high multiple of its current valuation.
The reason being it is a non-zero probability that the government will hand over billions more to equity investors via subsidized financing of their operations for years to come. How do you model that?
I'm curious if any readers are currently "betting" on the final (or temporary) direction?
Source: Yahoo Finance