Put selling in the financials appears to be one of the big institutional trades of the day, as evidenced by a large play in Morgan Stanley.
MS is up fractionally to $17.22 in midday trading as the bank comes off its lowest open since mid-January. Shares were above $21 a month ago.
The biggest print in MS is in the October 16 puts. optionMONSTER's systems show that 10,000 of those contracts were sold for $1.49 at twice the previous open interest, indicating that this is a new position.
This put selling is a bet that shares will hold above the $16 strike price. The seller is willing to buy shares if the stock drops below that level.
It is also a bet that the implied volatility of the options--in this case 42 percent--is less than the future volatility of the stock. The current 30-day historical volatility is 43 percent. (See our Education section)
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