Banking firm BB&T is drawing a bullish trade that may be pegged to the company's earnings report next month.
A trader bought 3,690 October 36 calls for $0.18 to $0.20 and sold about the same number of October 34 puts for $0.66 to $0.64 yesterday, according to optionMONSTER's tracking systems. This is clearly new positioning, as previous open interest in the two strikes was just 655 and 355 contracts respectively.
The result is a combination trade that is highly bullish, as the value of the calls will appreciate as the puts decline if the stock rallies. However, the opposite will occur if the shares fall. (See our Education section)
BBT rose 1.38 percent yesterday to close at $34.48. The stock came into August well above $36 but fell to the $34 level later that month. Shares held support at their 100-day moving average and have been drifting higher with it for the last week.
The North Carolina-based company is scheduled to report third-quarter earnings on Oct. 17. That month's options expire the next day, so yesterday's trader may be looking for strong results.
Total option volume in BBT topped 9,600 contracts yesterday, 6 times its daily average for the last month.
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