Options: Call-Selling in MetLife

Rumors of former MetLife chief to replace AIG CEO instigated moderately bearish options activity in Monday's session.
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By Jud Pyle, CFA, chief investment strategist for the Options News Network

CHICAGO -- Rumors of former

MetLife

(MET) - Get Report

Chairman and Chief Executive Robert Benmosche positioned to replace

American International Group

(AIG) - Get Report

CEO Edward Liddy instigated moderately bearish options activity in Monday's session.

We saw one investor sell 10,000 MET Dec. 40 calls for $1.80 during afternoon trading. These calls closed up 48 cents, and were home to open interest of 1,115 contracts heading into the day. Nearly 11,000 out-of-the-money Dec. 40 calls traded yesterday in total, with a volume-weighted average price of $1.8009.

Normal daily options volume in MET is approximately 11,000 contracts across all strikes, compared to the 21,000 options that changed hands yesterday. The bulk of the volume accumulated in the Dec. 40 calls.

We noticed some premium selling in MET yesterday, as investors could be expecting a modest pullback in MET after the potential line-up change. MET shares hit a high point at $35.50 on May 8, but they are currently about 0.4% off that high. MET shares closed up $1.71 to $35.66. Despite this rally, at least one investor could be betting that MET stock might expire below $41.80 at the end of the year.

Jud Pyle is the chief investment strategist for Options News Network and the portfolio manager of TheStreet.com Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for TheStreet.com.

Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."