Trader looks for pause in Fifth Third

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Fifth Third Bancorp has been on a huge run, but one large trader is apparently expecting a pause.

optionMONSTER's scanning programs detected the sale of 10,250 contracts each in the August 19 calls for $0.37 and the August 19 puts for $0.57. Volume was more than 4 times the previous open interest at each strike, indicating new activity.

The investor collected a credit of $0.94, which will be his or her profit if the regional bank closes at $19 on expiration. Gains will erode on either side of that price, turning to losses under $18.06 and over $19.94.

Known as a short straddle , the trade is designed to make money from the passage of time rather than a directional move. (See our Education section for other market-neutral strategies.)

FITB is unchanged at $18.80 in morning trading but is up 24 percent so far this year. It's been rallying along with other banks as the housing market improves and the yield curve steepens.

The rally has brought the shares back to the same level where they found support in early 2008 before crashing along with the rest of the market. That could be leading some chart watchers to anticipate a pause and help explain the short straddle.

Total option volume is 15 times greater than average so far in the session.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: FITB

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