Etrade (ETFC) adds 13 cents to $10.80 and a Jun 10 – 11 strangle is sold on the online broker at $1.15, 14000X. It’s tied to 200K shares at $11. We see these large premium sales in ETFC surface from time-to-time. Most recently, a Mar 9 straddle was sold on the stock at 80 cents, 19200X in mid-Feb (see 2/16 color). That, in turn, didn’t appear to be a winning strategy, as ETFC rose from $9.18 when the trade was initiated to $11.08 at the March expiration. Today’s strangle appears to express the view the stock will stay between $10 and $11 through the June expiration, which is in 50 days. Earnings were last reported on Apr 19 and will not come in to play again until after the June expiration. 30-day ATM implied volatility in ETFC options is down 2.5 percent to 35 today, compared to a 52-week range of 23 (5/31) and 111 (10/19).
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.