Options Swirl Around This Downgraded Bank

Puts are trading heavily in shares of Marshall & Ilsley on Monday, after downgrades on the financial services firm.

Average daily put volume for MI has been 1,200 contracts for the last 30 days, but this morning alone 17,800 puts traded hands in the session's first two hours, according to OptionMonster's proprietary tracking systems, which identify unusual options activity. The entire month of November saw just 25,500 puts traded.

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MI shares are trading lower at midday by some 3 percent, to around $11.50. Earlier, brokerages UBS and Robert W. Baird cut the company's 2009 estimates along with those of other financial firms, citing continued fallout over real estate lending.

Much of today's buying activity is taking place at the January 7.50 put strike (MIMU) bought for $0.30 to $0.35, a cheap long-shot bet, while the January 10 puts are going for $1 to $1.20. The stock's 52-week low is $10.90.

More Regional Banks:

US Bancorp
Northern Trust

Reporting Tomorrow:

Goldman Sachs

In The News:

Charles Schwab


Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.