2 Stocks in a Brexit Tailspin Today

RBS stock is pacing for its steepest slide since the Brexit backlash of '16

by Andrea Kramer

Published on Nov 15, 2018 at 1:35 PM

Following the surprise resignation of several ministers -- including Brexit Minister Dominic Raab -- in protest of Prime Minister Theresa May's Brexit plan, the shares of U.K. bank stocks are getting walloped today. Barclays PLC (NYSE:BCS) and Royal Bank of Scotland Group PLC (NYSE:RBS), for instance, are both swimming in red ink, and attracting notable attention in the options pits, too.

Barclays Puts Popular as Stock Pans New Lows

BCS stock gapped lower out of the gate, and touched a two-year low of $8.43 earlier. The security was last seen 5.6% lower to trade at $8.50, set for its steepest one-day slide since October 2017. Barclays shares have been in a downtrend since peaking at $12.55 in mid-April, with rebound attempts rejected by their 50-day and 80-day moving averages.

BCS stock chart nov 15

In the options arena, the bank stock has seen roughly 9,000 puts change hands so far today -- 10 times the average intraday pace, with volume set for the 99th percentile of its annual range.  That's compared to fewer than 2,000 Barclays call options traded.

Most active are the June 9 and December 8 puts, with about 5,500 and 2,100 contracts traded, respectively. It appears some traders may be cashing in their now-in-the-money June 9 puts, while others are possibly buying to open the shorter-term 8-strike puts, amid expectations for BCS to extend its slide and breach $8 within the next several weeks.

RBS Eyes Worst Day Since 2016 Brexit Plunge

Royal Bank of Scotland stock also gapped lower today, falling to a new annual low of $5.80. The shares were last seen down 10% to trade at $5.86, set for their worst day since the actual Brexit backlash of June 2016. RBS has been in a channel of lower highs and lows since peaking at $8.74 in late January, giving up about 33% in that time frame. Today, the security is on the short-sale restricted list.

RBS stock chart nov 15

The equity has seen nearly 2,400 call options cross the tape so far -- a whopping 108 times the average intraday pace, and set for the 98th percentile of its annual range. Just over 1,000 RBS puts have changed hands, though that's still 10 times the norm for this point in the day.

The December and January 2019 6-strike calls are most popular, with about 1,200 and 1,000 contracts traded, respectively. It appears a healthy portion of the calls may have been bought to open, suggesting the speculators expect RBS to rebound back atop the $6 level in the short term.

Today's appetite for Royal Bank of Scotland calls runs counter to the recent trend, though. While absolute options volume tends to run light on the bank stock, its 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at a healthy 7.2.


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