Credit Suisse attracted upside option activity yesterday after announcing the sale of its exchange-traded fund business.
optionMONSTER's Heat Seeker system shows that 1,992 January 27.97 calls were purchased for $0.25 at the same second. Open interest in the strike was just 78 contracts before trading began, so this is clearly fresh buying.
CS rose 2.99 percent yesterday to close at $27.59. The stock broke through multi-month resistance at the $24 in December and has been rising sharply since the start of the new year.
The Zurich-based banking giant rose right out of the gate yesterday morning on news that it was selling its ETFs, estimated to be worth more than $17 billion, to financial-management firm BlackRock. Credit Suisse also received an upgrade by Nomura to "buy" from "neutral" yesterday.
Yesterday's long calls, which lock in the price where the trader can buy the stock, are betting that CS will gain roughly 2 percent by expiration a week from today. If the shares are below the $27.97 strike price at that time, however, these options will expire worthless. (See our Education section)
The trade made up two-thirds of Credit Suisse's total option volume yesterday, which was nearly quadruple its daily average in the last month. Overall calls outnumbered puts by more than 8 to 1, a reflection of the session's bullish sentiment.