Short Interest Surges On These 4 Bank Stocks

Shorts have been all over banking stocks U.S. Bancorp (NYSE:USB), HSBC Holdings plc (ADR) (NYSE:HSBC), Huntington Bancshares Incorporated (NASDAQ:HBAN), and Bank of New York Mellon Corp (NYSE:BK)

by Josh Selway

Published on Feb 10, 2016 at 2:13 PM

Bank stocks have struggled mightily lately, and with volatility expectations extremely elevated at the moment, some traders may be seeking other ways to place their bets. Specifically, short interest shot higher on several financial firms during the most recent reporting period. Let's take a look at four names in particular: U.S. Bancorp (NYSE:USB)HSBC Holdings plc (ADR) (NYSE:HSBC)Huntington Bancshares Incorporated (NASDAQ:HBAN), and Bank of New York Mellon Corp (NYSE:BK)

With the market creeping higher, these stocks are mostly in the black today. For USB, that's meant a 0.8% pop to put it at $39.73, helped by an upgrade to "outperform" at Wells Fargo. The shares are still down almost 7% year-to-date, and may be seeing resistance at their descending 30-day moving average. 

Short sellers certainly foresee extended troubles on the charts, as short interest increased by over 41% during the most recent reporting period. What's more, pessimism is also present in the options arena, as 1.78 U.S. Bancorp puts have been bought to open for each call during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). 

As for HSBC, short interest exploded by 54.5% during the last reporting period. Option traders have seemingly positioned themselves in a bearish way, as well. The stock's Schaeffer's put/call open interest ratio (SOIR) stands at 2.49 -- an annual high -- meaning put open interest more than doubles call open interest among options set to expire within three months. 

On the charts, HSBC Holdings plc has been trending lower since hitting an annual high in April, touching a six-year low of $31.08 yesterday. Today, the shares are 1.7% higher at $32.16. 

Short interest on HBAN shot up 52.9% during the last two-week reporting period, and like HSBC, short-term speculators have taken an unsually put-skewed approach to the stock. The SOIR for HBAN currently comes in at 1.47, which is just 2 percentage points from an annual high. 

Unfortunately, Huntington Bancshares Incorporated isn't sharing in the technical success of its peers today, off 0.5% at $8.41, following a $0.50 price-target cut to $11 at Guggenheim. The shares have now lost over 29% since their December high of $11.87. 

Finally, BK saw its short interest jump nearly 68% during the most recent reporting period, and going back over the last two reporting periods, it's more than doubled. However, unlike the other stocks mentioned here, speculators have seemingly remained upbeat -- unless they're just shorts hedging their positions. BK's 10-day call/put volume ratio at the ISE, CBOE, and PHLX is 1.70. 

At last check, Bank of New York Mellon Corp was up 0.5% at $33.77. Going back three months, though, the shares have trailed the S&P 500 Index (SPX) by 14 percentage points, and just yesterday hit an annual low of $32.42. 

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