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Santander receives a shot in the arm

David Russell (david.russell@optionmonster.com)

Someone apparently thinks that Banco Santander is down but not out.

optionMONSTER's tracking systems detected the purchase of 7,500 January 7 puts for $1.35 and the sale of an equal number of January 2015 7 puts for $1.85. Volume was below open interest in the nearer-dated contracts, which suggests that an existing short position was closed and rolled forward in time.

The investor probably sold the January 2014 puts at an earlier date when the Spanish lender was above $7, looking for SAN to hold that level. But now that it's broken below $7 they face the risk of being assigned shares.

Moving the position forward by a year delays that possibility, while also letting him or her collect an additional $0.50 of income. It also eases their delta , making their position less vulnerable to swings in the share price. (See our Education Section.)

SAN is down 1.37 percent to $6.46 has lost one-quarter of its value since late February. It's been falling amid weakness in the Spanish economy and emerging markets but is still within its long-term trading range. That could make some investors think that it will hold its ground, especially with the shares trading for barely two-thirds of book value.

Total option volume is 7 times greater than average in the name.

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