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Bulls banking on bounce in Santander

David Russell (david.russell@optionmonster.com)

Banco Santander took a beating in the European debt crisis, but now the bulls apparently think that it's ready for a comeback.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 25,000 January 2015 10 calls for $0.35 and $0.40. Volume is more than twice open interest at the strike, indicating that new positions were initiated. There was also December 8 call buying on Tuesday.

Long calls lock in the price where shares can be purchased in the Spanish lender. Investors can use them to position cheaply for upside in the share price, providing exposure to a rally while also minimizing capital at risk. See our Education Section for more on how options can be used to manage trades. (See our Education section)

SAN is up 0.48 percent to $7.30 in afternoon trading and is up 10 percent in the last month. The company has struggled with weakness in Latin America and Europe, but its earnings report yesterday benefited from fewer provisions against bad real-estate loans.

The stock also trades for less than 80 percent of its book value, which could make some traders think it's cheap.

Total option volume is just shy of 29,000 today, 7 times greater than average in the name so far today, with calls outnumbering puts by 19 to 1.

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