One investor had his crystal ball out in March and took a big call position in The Bank of New York Mellon (BK), in the Sept $35’s. This trader “in the know” bought 9,000 + of the September $35 calls on March 7, 2014. He/she paid just $1.08 per call at that time, for a total investment of $972,000.
We’re not sure what, or who, this trader knew, but clearly it was something, or someone, important. Today Trian Fund Management LP announced it has built a $1 Billion + stake in The Bank of New York Mellon (BK). Trian has plans to discuss ways to improve the Bank’s shareholder value.
The Bank of New York Mellon is opened at $37.61, and peaked at $37.95, early this morning, and has since fallen down to $37.20, still up 97 cents on the day. That’s up 2.63% after the Trian investment announcement.
BK has traded as low as $27.91 in the past year, while it’s 52 week high is today’s high of $37.95 earlier this morning.
And that “lucky” options trader? Assuming they’ve held on to those 9,000 SEPT $35 calls, they’re sitting on a nice profit today. Those SEPT $35 call options are now bidding $2.60 and traded higher earlier today. At $2.60, the investors $972,000 original investment is now worth $2,340,000. Not bad for just under 4 months time.
There are currently 22 analysts following the company, though we doubt any of them knew this Trian investment was coming. The current consensus is a HOLD on The Bank of New York Mellon (BK), with an average price target of $35.33. Given the timeframe of the calls, it may be prudent to at least sell half of your calls if you had jumped into this trade when the “insider” did.
Here’s the 3 month chart on The Bank of New York Mellon (BK)