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Bearish Investors Bank on KeyCorp's Back-Month Puts

Put players are counting on a longer-term decline for KEY

by 3/19/2012 2:22 PM
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Bearish bettors have been prowling around KeyCorp (KEY - 8.80) today, as more than 7,600 puts have changed hands so far, which is six times above the norm. The bulk of the action has centered around the near-the-money June 8 strike, where over 6,700 of these puts have crossed -- almost all of them at the ask price, pointing to buyer-fueled volume. This option is currently home to peak put open interest of 4,933 contracts, making it safe to say that new positions are being opened here today. In order for these traders to make a profit from these puts, the stock must fall below the $8 level by the time June-dated options expire.

From a broader sentiment scope, options players appear to favor KEY calls over puts. The 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio checks in at 3.91, confirming that calls bought to open have nearly quadrupled puts during the past couple of weeks. This ratio arrives in the 56th percentile of its annual range, conveying that traders have been scooping up bullish bets over bearish at an accelerated clip.

However, most of the analysts following the banking issue don't seem to be feeling the love for KEY. According to Zacks, the equity boasts only seven "buy" or better ratings, compared to 13 lukewarm "holds" and four "sell" or worse recommendations.

On the technical front, KEY is ahead by 14% so far this year. A look at the charts shows that the stock is trading above the $8.50 level, which acted as resistance from May 2011 until last week's breakout.

At last check, KEY has added about 3% to trade at $8.80.


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