Put Volume Skyrockets on Huntington Bancshares Incorporated (HBAN)

09/14/2009 11:32 am EST


Elizabeth Harrow

Director of Digital Content, Schaeffer's Investment Research, Inc.

Put volume on Friday ballooned to 23 times the norm on Huntington Bancshares Incorporated (HBAN). The day's most active option is the September 4 put, where 29,350 contracts have changed hands so far. Open interest at this strike currently stands at just 5,907 contracts, indicating that the bulk of today's volume consists of newly opened positions.

HBAN price chartAbout an hour after the open, two large blocks totaling 15,300 contracts crossed the tape at the ask price of $0.20, pushing implied volatility up by 4.6%. These data points indicate that these puts were most likely bought.

HBAN is perched directly above the 4 strike at the moment, trading near $4.10 at last check. In order to turn a profit, the long put player in this scenario needs HBAN to drop below $3.80 per share by the time expiration rolls around next Friday.

However, with open interest at the September 4 put set to swell over the weekend, the speculator's hopes could be dashed by the effects of options-related support. As expiration draws closer, the unwinding of hedges related to this heavy put open interest could keep the shares aloft.

There is certainly some technical justification for taking a bearish stance on HBAN, though. The shares recently breached support at their ten- and 20-week moving averages, and these trend lines appear to have switched roles rather quickly to act as resistance.

By Elizabeth Harrow of Schaeffer’s Trading Floor Blog

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