Unusual Options Activity: Axos Financial (AX)

Nevada-based bank Axos Financial (AX) is now up for the year, as shares have recovered following the bank stock selloff in the spring. One trader sees shares trending lower in the weeks ahead.

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  • That’s based on the August $40 puts. With 24 days until expiration, 5,056 contracts traded compared to a prior open interest of 131, for a 39-fold rise in volume on the trade. The buyer of the puts paid $0.75 to make the bearish bet.

    Axos shares recently went for about $44, so the stock would need to drop about $4, or nearly 10 percent, for the options to move in-the-money. That’s still well over the stock’s 52-week low of $33.15.

    The bank has been a solid business over the past year, with revenues and earnings both up nearly 30 percent. And Axos has a 33 percent profit margin. Shares even trade at a premium to book value here, reflecting the value of the bank’s assets.

    Action to take: Shares have had a surge higher in recent weeks, and could see a small pullback on the scale of a 10-15 percent drop. Investors might want to hold off for such a drop. At present, the bank does not pay a dividend.

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  • For traders, the August $40 puts look reasonably priced for a likely pullback in the bank’s shares. The option is cheap enough that it can likely show mid-double-digit gains in the coming days before expiration.


    Disclosure: The author of this article has no position in the company mentioned here, and does not intend to trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.