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Speculators Bank on Fifth Third's March-Dated Calls

FITB's positive price action attracts bullish investors

by 2/28/2012 2:04 PM
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Bullish bettors have zeroed in on Fifth Third Bancorp (FITB - 13.58) today, as approximately 15,000 calls have changed hands so far, which is eight times above the norm. Close to 12,400 of these calls have crossed at the near-the-money March 14 strike -- half of them at the ask price, pointing to buyer-fueled volume. However, this option currently carries peak call open interest of 15,993 contracts, making it difficult to say with certainty whether new positions are being initiated here today.

This influx of call activity on FITB seems to be par for the course. The banking titan sports a Schaeffer's put/call open interest ratio (SOIR) of 0.58, confirming that calls nearly double puts among options slated to expire in three months. This ratio registers in the 18th percentile of its annual range, which means that short-term options traders have been more call-heavy toward the stock just 18% of the time over the past year.

Further echoing this optimistic skew toward FITB is its 10-day call/put volume ratio, which -- according to the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- sits at 4.20. In other words, investors have bought to open more than four calls for ever put during the past two weeks. This ratio ranks in the 80th annual percentile, signaling that traders have been snatching up bullish bets over bearish at a faster-than-usual pace.

Examining FITB's technical performance, the equity is up around 7% so far this year. The stock is also on pace to finish the month atop its 50-month moving average for only the second time since January 2004. In the afternoon hours of trading, FITB remains nearly flat with yesterday's close of $13.58.


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