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Options Trading: Bad Omen for Regional Bank Stock

Chris McKhann|Writer, OptionMonster
Thursday, 5 Mar 2009 | 3:34 PM ET

Shares of PNC Financial are down sharply for a second day, and options trading indicates that there may be more downside ahead.

The financial services company finished yesterday's (Wednesday's) session off 6.3 percent to $23.26 and is trading lower again this morning at $21.27, down another 8.56 percent. PNC shares are hovering just above their 52-week intraday low of $21.04 reached on Feb. 20 and are far below their highs over $80 only five months ago.

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On Monday, the company said its first-quarter earnings were in line with analyst estimates but slashed its quarterly dividend by 85 percent.

A large options trade yesterday was a put spread, as one player bought 10,000 of the April 17.50 puts in one block for $2.15 and at the same time sold 10,000 of the April 12.50 puts for $0.85, according to OptionMonster's tracking systems.

This trader paid $1.30 on that $5 spread, which means that the maximum loss is the $1.30 paid and the maximum gain is $3.70 if the stock is below $12.50 at expiration.

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Rival Regionals:

State Street STT

Hudson City Savings Bank

People's United Financial

Fifth Third Bancorp

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Chris McKhann is an analyst and writer for OptionMonster.

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Disclaimer

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HCBK
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PBCT
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PNC
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