Long-term call spread in Synovus
Chris McKhann | [email protected]
optionMONSTER systems show that the trade involved 11,376 each of the January 2014 3 calls and the January 2015 4 calls. The 3 calls traded for $0.31 and the 4 calls for $0.26 in volume above the previous open interest at each strike.
The investor is buying those nearer-term 3 calls and selling the 4s in a diagonal spread, which is similar to a vertical spread but uses different expiration months. The strategy is looking for SNV to trade up to $4 in the next couple of years, but not much beyond that. The trader is also taking advantage of the higher implied volatility in the longer-term options. (See our Education section)
SNV was down 4.1 percent yesterday to $2.56, its lowest close since January. The financial-services firm has tested resistance at 52-week highs around $2.80 in the last two weeks.
More than 34,300 SNV options changed hands yesterday, compared to a daily average of 2,024 contracts.