SunTrust Banks is at the lower end of its trading range in recent years, and one trader is making another bet on a rally.
optionMONSTER's Heat Seeker tracking system detected a surge of activity in the August 23 calls and the August 24 calls. It appears that an existing long position in 3,600 August 24s was sold for $1.15 and that twice as many August 23s were bought for $1.94.
This significantly increased the cost of the transaction, but it appears that this trader also sold about 1,700 August 23 puts for $0.31 to defray some of the expense. The resulting position reflects a highly bullish outlook for the Atlanta-based bank.
STI is off fractionally to $24.59 in late morning trading and has lost 12 percent of its value in the last three months. Profit beat expectations the last time it issued results on July 22 as bad loans decreased. Management, however, said lending margins will narrow as the bank shifts capital to safer assets.
The stock rose slightly on the news, then slammed into resistance at its 50-day moving average and pushed lower. But now it seems to be attempting to make a higher low.
Overall option volume in the name is 4 times greater than average so far today.
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