Traders see sharp move in SunTrust

RELATED QUOTES

SymbolPriceChange
STI40.36

An interesting spread tops today's option activity in SunTrust Banks.

optionMONSTER's systems detected buying in the January 27 puts, led by a block of 3,450 that went for the ask price of $1.16. At the same time, traders were selling the April 27 puts for $2.11. The volume at each strike was more than the previous open interest, indicating that this is a new short calendar spread .

This trade buys the front month and sells the later-dated contracts. It is a strategy that is greatly affected by time decay and makes a profit, though a limited one, if shares move sharply in either direction. (See our Education section)

STI is down 0.75 percent to $27.19 this morning but remains in an uptrend since trading as low as $25.30 a week ago. Shares hit a 52-week high above $30 in early October, which was about double the 52-week low from the end of 2011.

The option volume in STI is more than 8,700 contracts, compared to a daily average of about 1,600 in the last month. Almost all of that volume was in today's calendar spread.

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