Traders Go Delta Neutral on CIT Group

Shares of CIT Group (CIT) are trading lower on the session by 1.15%, at $39.44. The stock has seen a flurry of activity since late July, when financials began to catch a bid in the market.

In addition, there have been rumors swirling around trading desks that the company is being shopped around. There is currently no proof of any M&A activity around the name, but the stock has become increasing volatile over the past three weeks as players position in the name.

CIT Group’s Chairman and Chief Executive Office, John Thain, has categorically denied shopping the company around as recently as yesterday, September 27^th, on CNBC.

There has been a flurry of activity in the calls today, pushing activity to 3x normal volume.

The majority of the action is coming in October, where the $40 call was sold 4,900 times, near the bid, for $0.83. The bid/ask spread was $0.82/0.86 at the time of the trade. Open interest was just 3,141 contracts. Coinciding with this options trade was the sale of 215,600 shares of CIT common, at $39.3227.

With the $40 strike’s delta of 0.4331, the trader is clearly implementing a delta neutral strategy.

Implied and historical volatility recently shot higher, currently registering 33% and 30%, respectively; this is up from 21% and 18%, just three weeks ago.

CIT Group Inc. is a bank holding company. The company together with its subsidiaries provides primarily commercial financing and leasing products and other services to small and middle market businesses across a range of industries.

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.