Analysts Could Unlock More Gains for This Surging Bank Stock

BB&T Corporation (NYSE:BBT) has benefited from post-election rally in financial shares, and options traders have grown nervous

Feb 7, 2017 at 12:31 PM
facebook twitter linkedin

Options traders have set their sights on BB&T Corporation (NYSE:BBT) of late. While the bank stock has surged with its sector peers in recent months amid the Trump rally, the recent trend at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has been toward long puts. In fact, amid relatively low absolute trading volume, BBT shares have racked up a top-heavy 10-day put/call volume ratio of 7.78 across this trio of exchanges -- which is docked in the elevated 74th annual percentile.

Drilling down on near-term strikes, BBT's February 46 put has seen the biggest rise in open interest over the past 10 trading sessions, with nearly 1,100 contracts added. This strike is now home to peak front-month open interest of 3,106 contracts outstanding. Data from both the major options exchanges and Trade-Alert make it safe to assume new positions have been purchased here, meaning options traders are bracing for a move below $46 by expiration at next Friday's close.

Given BBT's impressive technical showing of late, it's possible that some of the recent put buying is a result of shareholders protecting paper profits against an unexpected pullback. However, there's plenty of skepticism to be found among the brokerage bunch, as well. In fact, of the 23 analysts following the financial shares, 15 maintain a "hold" or worse rating. Plus, the 12-month consensus price target of $48.52 stands at a slim 4.2% premium to the stock's current perch.

Considering the shares have been in a solid uptrend over the past 12 months, this leaves ample room for a round of upgrades and/or price-target hikes to help fuel BBT's fire. Specifically, the shares have surged nearly 49% year-over-year -- and are up 20% since their Nov. 8 close at $38.88. More recently, BB&T Corporation (NYSE:BBT) pulled back after hitting a record high of $47.85 on Dec. 21, but took a successful bounce in the $45.50-$46.00 neighborhood. This not only coincides with peak front-month put open interest, but also BBT's rising 60-day moving average and a 23.6% Fibonacci retracement of the stock's post-election rally. At last check, the bank shares were trading up 0.3% at $46.55.

BBT stock daily price chart

Don't miss Schaeffer's free weekly stock market forecast. Sign up now for Monday Morning Outlook.

Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners