Put Players Cash In On Diving Deutsche Bank AG (DB)

Deutsche Bank AG (USA) (NYSE:DB) is getting pummeled today, following yesterday's "Brexit" vote

Jun 24, 2016 at 11:17 AM
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Bank stocks are getting pummeled today, as the "Brexit" results spark chaos in the vulnerable financial sector. Deutsche Bank AG (USA) (NYSE:DB), for instance, has plunged 15.2% to $15.13 -- with stock volume in the 100th annual percentile -- and is on the short-sale restricted list. Options traders are responding in kind, with puts crossing at seven times the average intraday rate.

Already, 19,087 put options have traded on DB, compared to 7,285 call options. Most active is the stock's July 15 put. With DB tumbling to an intraday low of $14.62 earlier, it looks like speculators may have sold to close some of their positions. Elsewhere, it appears another option bear could be rolling her July 14 put down and out to the October 13 strike.

Widening the sentiment scope reveals a clear preference for long puts over calls in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DB options traders have bought to open 18,912 puts over the past 20 sessions, compared to 8,432 calls -- resulting in a top-heavy put/call volume ratio of 2.24.

Echoing this is the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.75. Not only does this show that put open interest nearly doubles call open interest among options expiring in three months or less, but it ranks in the 67th annual percentile. Simply stated, short-term traders are more put-heavy than usual toward DB.

The skepticism has been growing outside of the options pits, as well, with short interest up 18.2% in the two most recent reporting periods. However, these shorted shares account for just 1.4% of DB's available float, meaning the bearish bandwagon is far from crowded.

Technically, the stock has been dismal performance on the charts over the long term, shedding more than half its value over the past 52 weeks. Plus, yesterday's rally was quickly halted by DB's 120-day moving average -- a trendline that's ushered Deutsche Bank AG (USA) (NYSE:DB) lower for most of the past year.

DB daily chart June 24

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