Massive Put Options Trading in Bank of NY Mellon - Out-of-the-Money 3.33% Yield

Bank of NY Mellon (BNY) has seen massive put option trading, with a 3.33% 150-day short-put yield. This could indicate investors are shorting these puts to potentially buy BNY stock at a lower price before its upcoming earnings. The strike price for this large volume of BNY puts is $150.00, expiring on Jan. 15, 2027. Currently, BNY is trading at $163.44, and the 8% discount to the strike price ($150 / $163.44 -1 = -8.2%) suggests short sellers are taking advantage of the high premium.

The Barchart Unusual Stock Options Activity Report shows over 15,000 put contracts traded at this $150.00 strike price, over 124 times the prior number of contracts outstanding at this strike price and expiration date. This suggests institutional investors may be initiating these trades. However, BNY has delivered strong returns in recent quarters, with EPS rising 26.94% and 41.77% YoY in Q2 and Q1, respectively.

Analysts' price targets for BNY stock are lower, with an average PT of $167.33 (i.e., +2.38%) from 16 analysts. Despite the higher DPS, BNY's current yield is lower than its 5-year average and recent trailing 12-month yield, indicating potential undervaluation if strong earnings and ROE results persist.