Someone apparently thinks that Banco Santander is down but not
optionMONSTER's tracking systems detected the purchase of 7,500
January 7 puts for $1.35 and the sale of an equal number of January
2015 7 puts for $1.85. Volume was below open interest in the
nearer-dated contracts, which suggests that an existing short
position was closed and rolled forward in time.
The investor probably sold the January 2014 puts at an earlier date
when the Spanish lender was above $7, looking for SAN to hold that
level. But now that it's broken below $7 they face the risk of
being assigned shares.
Moving the position forward by a year delays that possibility,
while also letting him or her collect an additional $0.50 of
income. It also eases their
, making their position
less vulnerable to swings
in the share price. (See our Education Section.)
SAN is down 1.37 percent to $6.46 has lost one-quarter of its value
since late February. It's been falling amid weakness in the Spanish
economy and emerging markets but is still within its long-term
trading range. That could make some investors think that it will
hold its ground, especially with the shares trading for barely
two-thirds of book value.
Total option volume is 7 times greater than average in the
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