A smart money trader just bought 9,750 Jan $44 calls at $1.60 in U.S. Bancorp (USB) in an early Monday afternoon trade. This is a rather unusually large opening trade in the Jan 2015 $44 call options.
This trader is clearly expecting a quick pop in the stock price of U.S. Bancorp (USB) in the coming months. Our money is on sooner, rather than later, as even though the options don’t expire until January, a quick jump in the stock price in the next week will translate to a nice gain in the Jan $44 calls thanks to the implied vol rising.
U.S. Bancorp (USB) doesn’t release earnings (Q2) until July 16. It is possible that preliminary earnings have leaked, certainly not unheard of these days. Alternatively, an increase in dividend could have leaked early. That would certainly boost the stock price when/if announced. A third option, the usual. A leaked analyst upgrade from one of the major investment banks.
This is all just speculation on our part as, like you, the average investor, we have no clue as to the motivation of one large investor to bet over 1.5 Million dollars on U.S. Bancorp (USB) call options.
We’ll update you here, if we see or hear any reasons for this big option buy. It can be profitable to follow suit when you see the smart money make a big bet like this, but it can also burn you, if it turns out it wasn’t bought for the reasons above.