Financial Stocks: What Options Are Telling You

Financial stocks are seeing huge options activity Tuesday, led by State Street, which is down roughly 50 percent after reporting a 71 percent drop in fourth-quarter earnings.

Options volume for State Street, whose shares are trading just under $19 at midday, was six times normal this morning. The February 35 puts, which were out the money Friday, traded higher by more 400 percent today from $4.20 to $18.70, according to OptionMonster's tracking systems.

Heavy options activity was not confined to State Street, however, as names across the sector were affected by concerns over stability a day after the Royal Bank of Scotland announced historic losses. Shares of PNC Financial Services are down some 30 percent to about $26 after options spiked to five times their usual volume. PNC's February 40 puts, which were $2.50 in the money Friday, ran from $6 to $14.70 in the first 90 minutes of today's session alone.

Options volume in both Bank of America and JP Morgan doubled in that same time frame. BAC saw 120,000 changing hands compared with a 70,000 daily average, and JPM saw 127,000 trade versus a 69,000 average.


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