Regions Financial has had a healthy pullback, and now one bull
is looking for more upside.
optionMONSTER's Heat Seeker tracking system detected the purchase
of about 6,000 June 8 calls on the Alabama-based lender for $0.24.
At the same time, an equal number of June 9 calls was sold for
$0.03, resulting a net debit of $0.19.
RF rose 4.73 percent to $7.75 after starting the session with a 15
percent drop over the preceding month. The stock had been a
favorite among option traders looking to play the rebound in
regional banks earlier in the year, attracting several large
bullish transactions. The company reported a smaller-than-expected
loss on April 20 as new customers opened accounts and bad-loan
Bulls may like RF because it appears to have found support around
the same $7 level that was resistance throughout 2009. Chart
watchers may consider that evidence the shares are headed higher.
The call spread is designed to leverage a rebound, and will earn
about 400 percent profit if RF closes at or above $9 on expiration.
Overall option volume in the name is almost twice the average
level, with calls outnumbering puts by 50 to 1.
(Chart courtesy of tradeMONSTER)
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