Bearish Bet on SunTrust Banks: Options

CHICAGO (TheStreet) -- Although SunTrust Banks(STI Quote) received an "outperform" initiation from Oppenheimer and saw its target raised at Credit Suisse, at least one investor expressed moderate bearishness on the regional bank Tuesday by purchasing a horizontal put spread.

During the first hour of trading today, an investor bought the Oct./Nov. 21 put spread 5,000 times for about 85 cents per spread with the stock trading at $23.23 a share. Both the Oct. 21 puts and the Nov. 21 puts have dropped 10 cents so far on the day. The investor bought the Nov. 21 puts, currently trading at $1.40, and sold the Oct. 21 puts, currently trading at 55 cents, to offset some of the cost.

Current open interest of the Oct. 21 puts is 7,000 contracts and the Nov. 21 puts are home to current open interest of just 11 contracts.

Investors have been bearish on STI and other regional banks due to their exposure to commercial real estate. STI has enjoyed a nice rally since a 52-week low of $6 in February. The stock is currently up nearly 290% since then, but it looks like at least one investor is looking for these shares to drop below $20.15 in the fairly near term.

Heavy put buying action does not mean investors should run out and sell their STI shares. But keep in mind that at least one investor is betting on downside on looming concerns that shares of regional banks could pull back due to exposure to the commercial real estate industry.