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Options Update: Visa Inc. (V) & Regions Financial Corp. (RF)

V – Visa Inc.
The relief from the GAO report allowed shares in Visa to rise just 1% to $81.10 but not before shares traded at a 10-day low earlier in the session. But that’s where the fun started with options on the card-processor.

November calls at the 80 strike traded 2,600 times at a 46 cent premium before a spike in the share price sent premiums surging to as high as 1.16. At that point it looks like early call buyers banked handsome gains. As premiums eased to 90 cents we show two 10,000 lot blocks trading. Further share price gains propelled the same premium to as high as 1.84. Implied volatility gained around 12% this morning as traders responded to the news.

 


RF – Regions Financial Corp.
Near-term investors displayed bearish sentiment on Regions Financial today, while longer-term traders took to the February 2010 contract to establish bullish positions. The banking company’s shares are currently lower by 0.5% to $5.36. Investors purchased at least 2,300 puts at the December 4.0 strike for an average premium of 4 cents per contract. Perhaps put-buyers are scooping up cheap downside protection in case shares of RF collapse 25% by expiration next month.

The same strike price was targeted in the February 2010 contract, but investors here utilized puts to get bullish. Approximately 8,000 puts were sold short at the February 4.0 strike for an average premium of 20 cents each. Put-sellers retain the full 20 cent premium on the trade if shares of RF remain higher than $4.00 through expiration. The short sale of the contracts indicates investors are happy to have shares of the underlying stock put to them at an effective price of $3.80 apiece if the put options land in-the-money by expiration.

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