by David Russell
Bank of Montreal (BMO) will report fiscal third-quarter results Tuesday morning, and some traders are insuring against downside.
optionMONSTER's Depth Charge monitoring system detected heavy buying in the December 45 puts, which climbed from $3.90 early in the Monday morning session to as high as $5. Volume exceeded 12,000 contracts, compared with open interest of 1,706.
BMO fell 2.40 percent to $45.90 in afternoon trading. The Canadian lender is down 3.71 percent in the past month, compared with an 18 percent gain for the broad U.S. financial sector over the same period.
Management will release results before the bell Tuesday, and hold a conference call at 2pm eastern time. BMO is up 25 percent since reporting better-than-expected profit and announcing 1,100 job cuts on May 26.
The September 45 puts were also purchased, trading 3,155 times for $1.50 to $2.15 against open interest of 1,749 contracts. The December 40 puts traded for $2.30 to $2.80, although volume was only about half of existing open interest.
Overall options activity in BMO was more than 12 times average, with puts outnumbering calls by 20 to 1.
(Chart courtesy of tradeMONSTER)