A huge trade is anticipating a sharp move in People's United Financial.
More than 18,000 PBCT options have changed hands this morning, compared to its total open interest of 8,141 and a daily average of just 371 over the last month. A single trade dominates the action.
optionMONSTER systems show that a trader bought 18,000 August 15 puts for $0.60, above the listed ask price at the time. The open interest was just 63 contracts before the trade appeared, so this is clearly a new position.
Less than a minute later, a block of 990,000 PBCT shares was bought for $15--roughly half the stock volume in the name so far today. The combination of stock and puts creates a delta-neutral trade that is looking for a big move up or down in PBCT and/or the actual volatility to be greater than that implied by the options. (See our Education section)
PBCT is up fractionally at $14.98 in midday trading, the highest level for the stock since May 2010. The banking company's shares were below $12 at the end of 2012.
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