Unusual Options Activity: The Toronto-Dominion Bank (TD)

Canadian bank The Toronto-Dominion Bank (TD), is down nearly 10% over the past year as relatively high interest rates have weighed on loan growth. One trader sees shares trending higher into next year.

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  • That’s based on the January 2025 $57.50 calls. With 191 days until expiration, 5,090 contracts traded compared to a prior open interest of 138, for a 37-fold rise in volume on the trade. The buyer of the calls paid $2.15 to make the bullish bet.

    TD shares recently traded for about $55.50, meaning the stock would need to rise by $2.00, or about 4.5%, for the option to move in-the-money.

    TD stock hit a 52-week low of $53.52 in June, and has started trending higher over the past few weeks.

    The bank is still inexpensive, trading at about 9 times forward earnings. TD also trades at about 1.3 times its book value. That’s a bit pricey compared to a regional bank, but for a mega-bank, it’s still on the inexpensive side.

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  • Action to take: Investors may like shares here, given that they’re still near their lows and in an uptrend. Share also pay a 5.4% dividend at current prices.

    For traders, the January 2025 calls have ample time to play out. If shares trend higher over the next few months, the options stand to see mid-double-digit returns.


    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 company mentioned in this article.

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