Options: Hartford Financial Put Action

By Jud Pyle, CFA, chief investment strategist for the Options News Network

Heavy options activity in Hartford Financial Group(HIG Quote) crossed the tape the same day the company closed a deal to take over Federal Trust Bank, but at least one bullish investor appeared to be selling puts.

During midday trading Thursday, approximately 20,000 HIG Sept. 10 puts changed hands for around $1.05 with the stock at $12. The Sept. 10 puts, which dropped 30 cents on the day Thursday, were home to open interest of 48,000 contracts. More than 24,000 HIG puts changed hands yesterday versus the 10,000 calls that traded, but the price change in the puts is down more than delta, which indicates a seller.

Thursday morning, HIG announced it acquired Federal Trust Bank for around $10 million. The insurance company needed to own a bank before it could access $3.4 billion in TARP funds. Acquisitions generally imply company fortitude, and at least one investor could be expressing bullishness even though HIG needed ownership of a bank before it could access TARP funds.

HIG shares have rallied more than 350% since reaching a 52-week low of $3.62 on March 5. It looks like one investor might be betting that HIG shares will at least hold at their current levels. The investor needs the stock to expire higher than $8.95 in the September expiration month. HIG shares closed up 50 cents to $12.10. In pre-market trading, HIG shares were up 5 cents to $12.15.