Fifth Third Bancorp. (FITB) – One bearish options investor purchased a large put spread on Fifth Third Bancorp this morning in order to prepare for potential erosion in the price of the underlying stock through July expiration. FITB’s shares rallied slightly earlier in the session, but are currently flat on the day at $13.51 just before 12:00 pm (ET). The put strategist appears to have purchased 11,750 puts at the July $13 strike for an average premium of $0.37 apiece, spread against the sale of 11,750 puts at the lower July $12 strike for a premium of $0.13 each. The average net cost of establishing the bearish spread amounts to $0.24 per contract, thus positioning the responsible party to profit should FITB’s shares slip beneath the average breakeven point to the downside at $12.76 by expiration day. Maximum potential profits of $0.76 per contract pad the investor’s wallet if Fifth Third’s shares fall 11.2% from the current price of $13.51 to trade at or below $12.00 by expiration day next month.
Berkshire Hathaway Inc. (BRK.B) – Shares of the holding company, which owns subsidiaries engaged in diverse business activities such as property and casualty insurance and reinsurance, slipped slightly lower by 0.30% to stand at $79.29 just before 11:30 am (ET). Bearish options activity on the stock today suggests at least one investor is bracing for continued erosion in the price of the underlying shares through August expiration. The put player appears to have purchased approximately 1,300 puts at the August $75 strike for an average premium of $2.14 apiece, spread against the sale of 2,600 puts at the lower August $70 strike for an average premium of $1.03 each. The average net cost of the ratio spread amounts to just $0.08 per contract. The transaction prepares the responsible party to make money should Berkshire’s shares decline 5.5% from the current price to breach the effective breakeven point to the downside at $74.92 ahead of expiration day in August. Maximum potential profits of $4.92 per contract are available to the put spreader if shares of the underlying stock plummet 11.7% to settle at $70.00 at expiration.
PPL Corp. (PPL) – Options traders fired off bullish signals on PPL Corp. today with shares of the energy and utility holding company rallying 2.10% to $24.75 by 12:12 pm (ET). PPL was raised to ‘buy’ from ‘hold’ and given a 12-month target share price of $29.00 at Soleil Securities this morning. Investors expecting shares to continue to appreciate through July expiration ditched approximately 4,000 in-the-money puts at the July $25 strike to receive an average premium of $0.90 per contract. If traders are selling short the put contracts they keep the full premium pocketed on the transaction as long as PPL’s shares exceed $25.00 by expiration day. Investors could, however, be taking profits by selling-to-close previously established long put positions given previously existing open interest of 9,063 put contracts at the July $25 strike. The overall reading of options implied volatility on PPL Corp. shrank 15.2% to 24.43% by 12:18 pm (ET).
Gannet Co., Inc. (GCI) – The international news and information company popped up on our ‘hot by options volume’ market scanner this morning after one pessimistic options player purchased a plain-vanilla debit put spread in the August contract. The USA Today publisher’s shares are currently down 2.7% to stand at $15.90 as of 11:35 am (ET). The bearish spread involved the purchase of 1,250 now in-the-money puts at the August $16 strike for a premium of $1.20 each, marked against the sale of the same number of puts at the lower August $14 strike for a premium of $0.50 apiece. The net cost of the transaction amounts to $0.70 per contract. Thus, the investor responsible for the put play is prepared to make money as long as Gannet’s shares slip beneath the effective breakeven price of $15.30 ahead of expiration day. The trader walks away with maximum potential profits of $1.30 per contract if shares of the underlying stock plunge 11.95% from the current price to breach the $14.00-level by August expiration.