27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
One might assume an online lender like LendingClub Corp (NYSE:LC) verifies the income of borrowers in 100 percent of transactions. But this isn't even close to the case, according to Bloomberg report.
LendingClub verified the income around just a third of the time for one of the most popular loan products it oversaw in 2016, Bloomberg noted. This rate has fluctuated from just 16 percent in 2008 and as much as 47 percent in 2013.
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Meanwhile, Propser Marketplace, another online lender, doesn't check income and employment information for borrowers for around one quarter of the loans it makes.
In fact, in cases where LendingClub or Prosper perform a check on information and discovers a mistake such as overstated income, the loan transaction could still proceed. In LendingClub's case, the company told Bloomberg the company uses machine learning and other technologies to determine which applications need verification and which don't.
Meanwhile, traditional lenders like banks perform income and employment checks on nearly 100 percent of new customers before a transaction can occur. Credit card companies aren't near 100 percent and for the most part accept stated incomes, but credit card companies have more cushion against losses versus online players.
Banks and credit card companies could also request a form of collateral from new clients -- something which is almost non-existent in online peer to peer lending platforms.
Shares of LendingClub traded lower by nearly 2 percent Wednesday, likely a result of the less-than-flattering Bloomberg report.
Related Link:
LendingClub's Q1 Signals Another Step Toward Re-Establishing Its Growth Story
LendingClub Quietly Mounting Return To Normalcy Following CEO Scandal
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.