An interesting spread tops today's option activity in SunTrust Banks.
optionMONSTER's systems detected buying in the January 27 puts, led by a block of 3,450 that went for the ask price of $1.16. At the same time, traders were selling the April 27 puts for $2.11. The volume at each strike was more than the previous open interest, indicating that this is a new short calendar spread .
This trade buys the front month and sells the later-dated contracts. It is a strategy that is greatly affected by time decay and makes a profit, though a limited one, if shares move sharply in either direction. (See our Education section)
STI is down 0.75 percent to $27.19 this morning but remains in an uptrend since trading as low as $25.30 a week ago. Shares hit a 52-week high above $30 in early October, which was about double the 52-week low from the end of 2011.
The option volume in STI is more than 8,700 contracts, compared to a daily average of about 1,600 in the last month. Almost all of that volume was in today's calendar spread.
More From optionMONSTER
- Investment & Company Information