Stocks quoted in this article:
Ahead of tomorrow's earnings release, BB&T Corporation (BBT - 27.00) saw an influx of put activity yesterday, as close to 4,600 of these options changed hands, which was more than double the stock's average daily volume. The bulk of the action occurred at the out-of-the-money January 2012 26 strike, where nearly 1,800 puts were traded -- almost all of them at the bid price, suggesting they were sold. Open interest on this option jumped by 1,064 contracts overnight, making it safe to say that new positions were initiated at this strike. This option now carries open interest of 3,182 contracts. By selling the puts to open, speculators are betting on the equity to remain north of $26 by the time front-month options expire.
Despite yesterday's bullishly skewed uptick in put volume, a large number of traders still seem to feel pessimistic toward BBT. The 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio stands at 1.64, confirming that puts bought to open have comfortably outnumbered calls during the past couple of weeks. In fact, this ratio registers in the 93rd percentile of its annual range, conveying that options players have been snapping up bearish options over bullish at a much faster-than-usual clip.
What's more, the majority of analysts following the banking concern appear to share this negative sentiment toward BBT. According to Zacks, only eight "buy" or better ratings have been bestowed upon the stock, compared to 19 tepid "holds" and two "strong sells."
From a technical standpoint, BBT has gained more than 7% year-to-date, and has outpaced the broader S&P 500 Index (SPX) by roughly 15% during the past three months. On the charts, the stock has enjoyed steady support at its 10-day and 20-day moving averages since late November. However, at last check, the equity is down about 1% to hover at the $27.00 level.