E-Trade Financial Carries High Risk-Reward

E-Trade Financial (ETFC) has had its share of problems. A few years back, E-Trade was the biggest competitor to TD Ameritrade (AMTD) and the stock traded together with the brokerage stocks. Yet, since the mortgage headlines began to hit the wires last year, the stock has dropped from $23 to $3 today. In fact, the stock hit $2.25 back in January of this year. In other words, the stock has been hit like it were a Countrywide.

What the market might have overlooked is that ETFC's primary line of business has been its trading business. In fact, the number of net new retail accounts in July totaled 19,583. Total number of accounts is now at over 4.4 million. Total retail customer assets are at $162 billion at the end of July.