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Downside play in People's United

Chris McKhann (chris.mckhann@optionmonster.com)

A huge downside position dominated the option activity in People's United Financial on Friday even as its shares bucked the broader market's decline.

optionMONSTER systems show that 17,700 August 15 puts sold for $0.10 against previous open interest of 18,150. At the same time, 17,700 September 15 puts were bought for the ask price of $0.50 in volume that dwarfed open interest of just 11 contracts at that strike, clearly indicating that this is a new position.

The trader is rolling a long-put position forward, spending a net $0.40 to get another month for the strategy to work. This could be an outright bearish play or a hedge on long shares . (See our Education section)

PBCT finished Friday at $14.93, gaining 1.01 percent while the major equity indexes closed lower. Shares of the Connecticut-based banking company were at a high of $15.67 in late July after beating second-quarter earnings expectations. They were below $13 in mid-April.
People's United saw 37,678 PBCT options changed hands overall on Friday, compared to a daily average of just 276 in the last month. Total puts outnumbered calls by 11 to 1.

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