Put Volume Continues to Surge in Moody’s

Shares of Moody’s Corp. MCO are flat on the session, currently trading $22.37, but put volume is exploding in dramatic fashion that I have not seen since 2008. The $22, 21, 20, 19, 17.50, 16, 15, and 12.50 strikes in May and June and heavy with purchases. The put/call ratio on the name is now running at 3x the norm (though put volume has been escalating in the name so much that that number is falsely small). Implied volatility in the name is spiking to its highest level in nearly 120 days, currently registering 50%. I have been extremely bearish on the name for a month now and today’s options activity only reinforces my negative view. I think that buying the June $19/17.50 put spread for $0.23 is a good bet (and, yes, it is a BET) given that it is likely that major regulation could come and restructure the company. Max gain on the trade would be $1.27 or 552%.