It always pays to watch what the smart money is doing in the options markets, and CIT Group (CIT) just saw an unusual investor buy 1700 + OCT $48 calls at 97 cents this morning.
CIT Group (CIT) is currently trading $45.31 up 15 cents in early trading, though it bounced down as low as $44.71 near the open today.
This is a rather unusual options trade for CIT Group, which provides commercial financing and leasing products to a wide range of small and medium sized business in North America, as well as globally to a lesser extent.
So why this sudden large trade in CIT call options? The only visible catalysts are today’s investor day, and, earnings release that is scheduled for July 21, 2014. Also, today, CIT Group raised it’s dividend 50% which while beneficial to current shareholders, doesn’t explain this call buying after the div increase was announced.
So, our educated guess, is that a prominent analyst upgrade will be announced shortly, thanks to said dividend hike, and this upgrade has been leaked, and/or used by the analysts in question to buy the options before the news is disseminated to the public. This happens a lot, and the SEC is incapable of enforcing this kind of abuse by the analysts.