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Bearish Bettors Bolster Comerica's Front-Month Put Volume

CMA continues to linger in the bearish limelight

by 2/21/2012 10:41 AM
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Comerica Incorporated (CMA - 30.85) saw a jump in bearish options activity on Friday, as approximately 3,400 puts changed hands, doubling the equity's average daily volume. Most active proved to be the near-the-money March 30 strike, where 2,601 of these puts were traded -- all of them at the ask price, signaling buyer-driven volume. Open interest at this strike rose by 2,499 contracts over the weekend, making it safe to assume that a large portion of the volume consisted of newly opened positions. This option is now home to peak put open interest of 7,890 contracts. By purchasing these puts to open, investors are betting on the stock to fall below $30 by the time front-month options expire.

This preference for puts over calls is more of the same for the banking behemoth. The Schaeffer's put/call open interest ratio (SOIR) rests at 1.21, confirming that puts comfortably outnumber calls among options set to expire in three months. This ratio registers in the 96th percentile of its annual range, conveying that short-term options players have been more put-heavy toward the stock just 4% of the time over the last 12 months.

Echoing this pessimistic sentiment toward CMA is its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio, which sits at 18.90. In other words, puts bought to open have outnumbered calls by almost 19 to one during the past couple of weeks. In fact, this ratio is just two percentage points shy of a yearly acme, indicating that traders have been snapping up bearish bets over bullish at an almost annual-high pace.

Technically speaking, CMA is ahead by roughly 20% so far this year, and has bested the broader S&P 500 Index (SPX) by over 11% during the past 60 sessions. On the charts, the stock is already on pace to close a second week atop its 50-week moving average, which had been largely out of reach since last March.

In the morning hours of the session, however, CMA is down about 1% to hover at $30.85.


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