Unusual Options Activity: Barclays PLC (BCS)

Shares of UK-based bank Barclays PLC (BCS) had a sharp selloff over the past few months that has recently started to reverse. One trader sees a continued move higher.

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  • That’s based on the May $10 calls. With 57 days until expiration, 13,154 contracts traded compared to a prior open interest of 296, for a 44-fold jump in volume on the option. The buyer of the calls paid $0.43 to make the trade.

    Shares of the bank were recently going for just over $9 per share, so the stock would need to rally another 7 percent for the option to move in-the-money. That’s still moderately off the bank stock’s 52-week high of $12.20 per share.

    Concerns of a global economic slowdown and rising interest rates have led to the bank shares declining by nearly 8 percent over the past year. Yet the bank trades at a significant discount to its book value of 0.4 times, and sports a 32 percent profit margin.

    Action to take: The bank recently upped its dividend substantially, so buyers at today’s prices can get a starting yield over 3.6 percent with more room to grow.

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  • Traders should consider the May calls. While they don’t have much time to play out, they’re inexpensive and can easily nab traders mid-to-high double-digit gains in the next few weeks before expiration.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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