by Houghton and Atkeson 06/19/08
On June 2, we wrote about Sept 15 Put (KEYUC) buyers in KeyCorp (KEY).
KEY was trading at a 52-week low at about $19.30. Two weeks later, KEY fell to $11.31, a greater-than-40% move in the stock and a 382% return in the option (the 85-cent put now sells for about $4.10).
U.S. Bancorp (USB) looks like a similar situation.
USB is trading near a 52-week low, but options investors are betting it will go much lower. They are buying the July, September and December puts at the $27.50 strike more than 20,000 times.
Additionally, they are buying the USB July 25 Puts (USBSE) about 4,500 times and selling the July 30 Calls (USBGF) more than 3,000 times.
If the stock were to reach $27.50 from its current level of about $29.80, it would be hitting three-year lows and would likely be headed lower.
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