SunTrust Banks is getting hammered after an abortive rally, and
now the bears are piling in.
optionMONSTER's Depth Charge tracking program detected the purchase
of about 10,000 November 24 puts for $0.95 to $1 and the sale of an
equal number of November 26 calls for $1, resulting in a net cost
of about zero. Volume was more than 4 times open interest in both
STI fell 4.87 percent to $24.34 in morning trading and is down 10
percent in the last three sessions. It's been falling along with
other U.S. banks as investors worry about uncertainty surrounding
foreclosures and as the sector continues to grapple with a
The SPDR KBW Bank exchange-traded fund (
) is down 3.7 percent in the last week, compared with a 1.7 percent
drop for the broader financial sector. Recently, the strength in
the financial sector has shifted to non-banks such as property
& casualty insurers like Allstate and Chubb, financial
guarantors such as MBIA and Ambac Financial, and credit-card
issuers such as MasterCard.
The trade on STI will simulate a short position in the stock and
produce significant leverage if shares fall below $24. The position
will lose money above $26.
The company's next earnings release is scheduled for the premarket
on Oct. 21.
The bearish trade pushed overall option volume in the stock to 5
times greater than average, according to the Depth Charge.
(Chart courtesy of tradeMONSTER)
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