Markets

Deutsche Bank sees big put spread

Option activity remains bearish in Deutsche Bank as it drops back to levels from April 2009.

optionMONSTER's Depth Charge tracking system detected the purchase of about 10,000 October 35 puts, most of which priced for $2.70 to $2.75, and the sale of an equal number of October 25 puts for $0.75. Volume was more than 70 times open interest in both strikes.

The trade resulted in a cost of about $2 and has the potential to earn 400 percent if the German bank closes at or below $25 on expiration. The strategy is known as a vertical spread because the investor used premium from a higher or lower strike to pay for the options that were purchased. (See our Education section)

DB is down 1.8 percent to $39.18 in midday trading and has fallen 24 percent in the last month.

Overall option volume is nearly 7 times greater than average in the name so far today, with puts outnumbering calls by 56 to 1.

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

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


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

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