Regional bank Valley National Bancorp (VLY) is up 8% over the past year, far lagging the overall stock market. One trader sees shares trending higher over the coming weeks.
That’s based on the October 18 $10 calls. With 25 days until expiration, 18,507 contracts traded compared to a prior open interest of 263, for a 70-fold rise in volume on the trade. The buyer of the calls paid $0.15 to make the bullish bet.
Valley National recently traded for about $9.35, so shares would need to rise by $0.65, or about 7%, for the option to move in-the-money.
Shares are well off their 52-week high of $11.22, set last December. But the stock has been rocketing higher since hitting a low back in June.
Operationally, the bank has had poor returns. Earnings have been cut in half over the past year, and revenues are down by 22%. However, the bank trades at 0.7 times its book value, and at 10 times forward earnings.
Action to take: Investors may like shares here, as the bank is inexpensive and the stock is trending higher. Plus, at current prices, Valley pays a 4.7% dividend.
For traders, the October $10 calls are aggressive, but could see high double-digit returns over the coming weeks. Traders should look to take quick profits.
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.