U.S. Bancorp drew long-term put selling even as its stock dropped yesterday.
USB was down 1.06 percent on the day to close at $28.81. It was at a three-year high of $29.74 on Feb. 8 and pushed back toward that level on Tuesday before closing that day lower. Shares have been trending higher since hitting a 52-week low of $20.10 in late August.
Yesterday's option volume topped 29,000 contracts, compared with a daily average of 12,000. Topping that action was activity in the January 2013 20 puts.
A block of 9,700 of those contracts traded for $0.85, according to optionMONSTER's systems. The previous open interest at that strike had been 8,097, so this is a new opening position.
The put seller is betting that USB will remain above $20 through the beginning of next year, a level it has not fallen below since July 2009. It is also a bet that USB's volatility will be less than that implied by those puts. (See our Education section)
The implied volatility of the puts is 40 percent. The 30-day historical volatility is at 18 percent, though it was above 40 percent from August to mid-November.
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