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Regional lender New York Community Bancorp (NYCB) offered a new reminder Friday that commercial real estate problems are not totally in the rear-view mirror of US banks.

The Hicksville, N.Y.-based regional lender posted higher loan loss provisions and loan write-offs in the third quarter than Wall Street expected. It also reported its fourth consecutive quarterly loss, of $280 million, and delayed its goal of turning profitable by a year to 2026.

Its stock fell 8.3% Friday. As of Friday’s close, it has fallen 65.6% since the beginning of the year.

NYCB is a big lender to office buildings and rent-regulated apartment complexes, especially in New York City. With $114 billion in assets, it is one of the country’s 30 largest banks.

Its stock began plummeting in January after the bank set aside more money for real estate loan losses related in part to those apartment complexes in the New York City area.

NYCB was able to calm the market with an emergency equity infusion from a group that included former Treasury Secretary Steven Mnuchin. A new team began cutting the bank’s exposure to commercial real estate while selling businesses, cutting costs, and laying off employees.

Earlier this year, the bank pledged as part of its turnaround it would turn a profit or break even in 2025.

But on Friday, the bank pushed that forecast to 2026 while also lowering what it estimates it will earn in that breakthrough year.

“The company is making a seismic change, and that commercial bank is going to be better in 2026 and 2027 from a profit and structure and franchise value perspective,” Janney analyst Chris Marinac told Yahoo Finance. “It’s simply going to be more expensive for them to make the transition in 2025.”

NYCB is not the only bank still working its way through commercial real estate burdens.

Wells Fargo (WFC) CEO Charlie Scharf said on Thursday that his bank may lose $2 billion to $3 billion on its commercial real estate office loan portfolio and that the problems are expected to play out over the next three to four years.

“We’re going to lose $2 to $3 billion, it’s a lot of money,” Scharf said at an event in Washington Thursday. “On the other hand, we’ve reserved for all of it.”

Two weeks ago, Wells Fargo disclosed that it had an allowance of $2.42 billion for future credit losses.

Scharf said concerns about commercial real estate are waning, however, as interest rates start to come back down, and that most of the problems are concentrated among office buildings that are emptier than they were pre-pandemic

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It’s “not something that we look at as anything crippling or should have a knock-on impact to any other asset class.”

An October survey from the Mortgage Bankers Association released Thursday reported that delinquency rates on non-office CRE loans are starting to ease even as those rates continue to rise on office building borrowings.

NYCB has roughly $2.6 billion in office loans, but it is more heavily exposed to multifamily properties.

As of the third quarter, about 45% of its loans held for investment are tied to apartment complexes — many of which are rent-regulated buildings in New York state that were impacted by a 2019 New York law change.

New CEO Joseph Otting, a former head of the US Office of the Comptroller of the Currency, has been leading a comprehensive review of its multifamily and other commercial real estate loans as part of an effort to turn around the bank.

It also recently announced plans to eliminate roughly 22% of its employees. Of that total, 700 positions have already been eliminated. The company plans to cut another 1200 more before the end of the year as it closes on the sale of its mortgage servicing and third-party origination business.

At 5 p.m. ET today, it will also officially change its name to Flagstar Financial Inc. On Monday, the bank’s stock will cease trading under its current NYCB ticker symbol and instead trade under the symbol FLG.

The name Flagstar comes from the Troy, Mich.-based lender that NYCB acquired in December 2022.

One big reason for the bank’s change in profitability forecasts is that its expenses will be $50 million to $100 million higher in 2024 and $100 million to $150 million higher in 2025 and 2026.

“I really feel good about the people and the direction that we’re going in,” Otting told analysts Friday.

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

Click here for in-depth analysis of the latest stock market news and events moving stock prices.

Read the latest financial and business news from Yahoo Finance

Electric truck maker Nikola (NASDAQ: NKLA) continues to work to grow its business, and it announced some new progress this week. That led to a jump in the stock price. As of early Friday morning, Nikola shares were 10.5% above last Friday’s closing price, according to data provided by S&P Global Market Intelligence.

However, that bump higher still didn’t do much to offset the huge decline the stock has had this year. Nikola shares have dropped by about 84% year to date, even as the company begins to accelerate sales of its hydrogen fuel cell electric trucks.

Yet this week’s news of an agreement between Nikola, global beverage company Diageo, and logistics provider DHL Supply Chain to deploy two new Nikola hydrogen trucks in Illinois is still notable progress for the electric truckmaker. DHL Supply Chain is a division of DHL Group, and a longtime logistics contract partner for Diageo’s North American operations.

The two Nikola hydrogen fuel cell trucks joining the DHL Supply Chain fleet may not sound like enough to be impactful for the company or the stock. Nikola sold 72 new trucks to its wholesale distributors in the second quarter alone. But these two trucks represent its entry into a new geographic region. Nikola has mostly focused early sales on the West Coast, and near Southern California ports specifically. Its niche product requires hydrogen supply and fueling infrastructure, so holding to a contained market geography made sense.

Now it will have the first two hydrogen fuel cell trucks in service in the state of Illinois. It will also include a modular refueler on the Diageo campus in Plainfield, Illinois, the company said. So this deal is more meaningful to Nikola than it may look on the surface. And investors seemed to acknowledge that this week.

We should hear more about the company’s expansion plans when it reports third-quarter results next week on Thursday, Oct. 31.

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Palantir Technologies (PLTR) has been a solid mover in 2024. And with an IBD Composite Rating of 99, let’s position two option plays to consider in Palantir stock.

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Anne-Marie Baiynd: Feel At Home Trading On The Range

Both can be taken simultaneously. The first will be a short put spread to lean into the overall bullish structure of the chart. In the second trade, we will share a long call butterfly with a twist.   

Palantir stock stands No. 1 overall within the enterprise software industry group, according to IBD Stock Checkup. So, it stands to reason that the chart is likely to show traders pressing ever higher, with new buyers coming into Palantir during the dips over the next quarter.

Earnings are scheduled for Nov. 4. So, we can wait to take this trade in Palantir stock after earnings. Or we could position before the results to potentially catch a move.

The key thing to watch? Simply your risk exposure.

Palantir Stock Action

The chart is extended in the near term. Plus, we approach what might be a fair bit of market volatility into the election cycle. My suspicion? Any dips get likely bought. But the breakout near the price point of 30 in Palantir stock is sharply lower than the current price near 44. 

When we position with short spreads into earnings, we must consider our position size. Implied volatility within the option chains will spike into the Nov. 4 earnings news. If shocks come, we will get penalized. And if the release is very close to the options’ expiration dates, we take on more risk. No significant movement in Palantir stock will result in the bull put spread losing much of its value. This benefits traders.

When we position with long butterflies into earnings, we must consider our position size. Butterflies carry great rewards but lower probabilities of success.

When shocks come, we are well rewarded. When the moves are undersized, we are not penalized heavily so long as our sizes are small. No significant movement will result in the butterfly losing much of its value. As I often say, we assume that we don’t know the pure direction. But we can estimate the magnitude of the move using the ATR (average true range, as measured on the weekly chart) and the implied moves that market makers have priced into the move over the weeks and months ahead.

Trade Structure

The short put spread allows us to sell premium by selling an out-of-the-money put and buying another with a lower strike to protect or hedge any extraordinary price action. Set it up this way:

• Sell to open 1 PLTR Dec. 20-expiring 35 put
• Buy to open 1 PLTR Dec. 20 30 put

The short put spread above will deliver a credit of 81 cents, or $81 per share of a 100-shares contract, based on recent trading. This amount also serves as the maximum profit. Maximum loss for the position is calculated by subtracting the distance between the strikes and then the premium collected. That is, we get $35-$30 = $5 – 0.81= $4.19, or $419 per set of options.

You might ask, “Why would I take a position that has 4x on the losing side versus the profit?” The answer: This spread has a five-time likelihood of expiring worthless, thus giving the trader the overall edge if this trade is done many times over. 

Long Call Butterfly 

A long call butterfly is positioned so the ‘long wing’ of the trade gives us a likelihood of returns, while using the short wing to finance part of the trade.

This long call butterfly holds a single long call spread (a bullish position) and two short call spreads (a bearish position) that share the middle strike. Please notice the side that holds the short call spread is tighter so that the risk is bounded; there is no need for additional margin.

• Buy to open 1 PLTR Dec. 20 50 call
• Sell to open 3 PLTR Dec. 20 60 calls
• Buy to open 2 PLTR Dec. 20 65 calls

The call butterfly above will cost 86 cents per set of contracts, based on recent trading in Palantir stock. This makes $86 the maximum potential loss. It also means max gain comes out to $9.14, or $914 ($60 – $50 – $0.86 x 100) before commissions. Total profits will begin to erode if Palantir stock stays above 60.

Our maximum exposure is the cost of the butterfly, and it is also the max risk of the position. The break-even price stands at 50.86.

Stock hunting using fundamental and price strength within the IBD methodology is where I firmly plant myself under the backdrop of the current economic backdrop. I use technical analysis to find ideal buying opportunities in conjunction with the tools for strength seen on IBD.

Catch Anne-Marie Baiynd On The Oct. 25 IBD Live Episode

Understanding Long Butterfly Spreads

The goal of taking long butterflies like the one above is to take advantage of higher implied volatility as the undercurrent of markets shift to participate in an outsized move in either direction.

This trade could be placed both before and after earnings, though the movements may not be as amplified. Traders may try to push Palantir stock past 50 before it retraces near 35, a level of support.

As a side note, 45 serves as a resistance level, which occurred five months after its IPO at $7.25 a share on Sept. 30, 2020.

Palantir Stock: The Exit Strategy

Let’s consider three choices to exit the trade. One, sell the butterfly in Palantir stock once it gets to an acceptable profit margin for you. I customarily look for 100%-300% profit in these setups. Two, sell the bull put spread once it gets to an acceptable profit margin for you, normally 50% for me. Three, sell the spreads once it hits your loss threshold as determined by personal risk. This will happen with extreme movement. I customarily look at about 65%. Depending on my size, I will choose 50%.

And finally, sell the entire position with both the bull put spreads and the butterfly spreads into the week before expiration, if all is going well and you have decided to hold the trade to closer to the end of expiration.

Final point: I have had many a trade go sideways taking it down to the wire and not capturing gains, so I do not advise this. 

Anne-Marie Baiynd is a 20-year veteran trader of stocks, options and futures and is the author of “The Trading Book: A Complete Solution to Mastering Technical Systems and Trading Psychology.” She holds no positions in the investments she writes about for IBD. You can find her on X at @AnneMarieTrades

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