The shares of Fifth Third Bancorp (FITB - 10.52) followed the broader equities market higher yesterday, climbing back into double-digit territory. However, the security is now facing a familiar speed bump in the $10.80 - $11 neighborhood, which has smacked the stock lower since early August. What's more, looking at yesterday's action in the options pits, it appears some speculators are betting on this region to remain impenetrable over the near term.
Jumping right in... FITB saw around 6,400 calls cross the tape yesterday -- more than double its average daily call volume, and more than 12 times the number of FITB puts traded. Most of the action centered on the October 11 call, which saw roughly 3,800 contracts change hands -- mostly at the bid price, suggesting they were sold. Plus, call open interest at the front-month strike swelled significantly overnight, pointing to sell-to-open activity.
By writing the 11-strike calls to open, the sellers are expecting FITB to remain south of the $11 level through October options expiration. Unlike the call buyer, the call seller is hoping the options expire worthless, allowing them to retain the entire premium received from the sale -- which represents the maximum reward on the play.
Why OIH Is Finding Key Support at $52
Featured Partners: AOL DailyFinance
© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242
Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: firstname.lastname@example.org
All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.
Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.