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.
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