I'm not buying into the rhetoric from all the blowhards on CNBC that the Treasury will be wiping out the shareholder equity in Fannie and Freddie imminently. Firstly, it could be a political disaster for the Republicans, just a few months before the election. Okay, in theory the Treasury operates independantly of political pressure, but if you believe that, you probably also believe there is no insider trading on Wall Street. Take a look at the most popular traded stocks on sites like Tradeking - Johnny voter, rightly or wrongly, is gambling his savings on these stocks as their death spiral continues. If the government comes in and wipes out his investment, we all know who he'll be voting for in November. At this time, the value of Freddie and Fannie is so low, the Treasury needs a bailout plan that doesn't completely wipe out the equity, but gives the potential new owners of the GSE's plenty of upside potential, without the downside exposure of negative net worth in the companies. I'm banking on the Treasury doing as little as possible to intervene for as long as possible. Sitting on your hands can sometimes be a good strategy!!!. I'm writing FNM September $2.50 Puts at a $0.45 premium. A highly risky trade, but I know my downside is only $2.05 per share if the equity is wiped out before the option expires. However, if I'm right, I'll get a great percentage return on this small trade. If it loses, I won't be losing any sleep over it.