🏦 FHN $9.4M Short Call Butterfly - Bullish Bet on Regional Bank Stability! 🦋
A major institutional trade worth $9.4M just hit the tape. See the full strategy breakdown, technical levels, and trading ideas inside.
🏦 FHN $9.4M Short Call Butterfly - Bullish Bet on Regional Bank Stability! 🦋
📅 November 25, 2025 | 🔥 Unusual Activity Detected
🎯 The Quick Take
Someone just placed a $9.4 MILLION complex options bet on First Horizon through a sophisticated short call butterfly spread expiring February 20, 2026! This isn't your typical retail trade - a massive 60,000 contract position across three strikes ($23/$24/$26 calls) suggests institutional money betting that FHN stays in a tight trading range around $23-24 over the next three months. Translation: Smart money expects stability and controlled upside for this Memphis-based regional bank through Q4 earnings and into 2026.
📊 Company Overview
First Horizon Corporation (FHN) is a prominent regional banking powerhouse based in Memphis, Tennessee:
- Market Cap: $10.67 Billion
- Industry: National Commercial Banks
- Current Price: $22.56 (as of November 25, 2025)
- Primary Business: Parent company of First Tennessee Bank with 416 branches across the Southeast, offering commercial banking, consumer banking, wealth management, and specialty banking services
💰 The Option Flow Breakdown
The Tape (November 25, 2025 @ 11:48:30):
| Time | Symbol | Side | Buy/Sell | Type | Expiration | Premium | Strike | Volume | OI | Size | Spot | Option Price | Option Symbol |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 11:48:30 | FHN | MID | BUY | CALL | 2026-02-20 | $3.4M | $24 | 60K | 3.2K | 40,000 | $22.47 | $0.85 | FHN20260220C24 |
| 11:48:30 | FHN | MID | SELL | CALL | 2026-02-20 | $1.2M | $26 | 60K | 70K | 40,000 | $22.47 | $0.30 | FHN20260220C26 |
| 11:48:30 | FHN | MID | SELL | CALL | 2026-02-20 | $4.8M | $23 | 60K | 61K | 40,000 | $22.47 | $1.20 | FHN20260220C23 |
🤓 What This Actually Means
This is a Short Call Butterfly Spread - one of the most sophisticated options strategies used by institutional traders! Here's the breakdown:
- 🦋 Strategy Structure: Sell 40,000 contracts of $23 calls, Buy 40,000 contracts of $24 calls, Sell 40,000 contracts of $26 calls
- 💸 Net premium collected: $2.6M ($4.8M + $1.2M - $3.4M = $2.6M credit received)
- 🎯 Sweet spot: Stock trading at exactly $24 at February 20, 2026 expiration (87 days away)
- 📊 Maximum profit: Approximately $2.6M if FHN lands at $24 strike at expiration
- ⚠️ Risk profile: Limited downside risk if stock stays below $23 or moves above $26
- 🏦 Position size: 40,000 contracts = 4 MILLION shares worth ~$90M exposure
What's really happening here:
This trader is making a precision bet that First Horizon will trade in a narrow range between $23-25 through Q4 2024 earnings on January 16, 2025 and into February expiration. The short call butterfly is a neutral to slightly bullish strategy that profits most when the stock lands exactly at the middle strike ($24), with the trader collecting $2.6M upfront and betting on controlled movement rather than explosive volatility.
Unusual Score: 🔥 EXTREMELY UNUSUAL - The highest premium leg shows Z-score of 293.06x average size with 13.37x and 9.88x on the other legs. This type of multi-leg institutional positioning happens only a few times per year for regional bank stocks!
📈 Technical Setup / Chart Check-Up
YTD Performance Chart
First Horizon is trading at $22.56, showing a steady recovery trajectory following the failed TD Bank merger in 2023. The regional bank has transitioned from acquisition target to potential acquirer, focusing on organic growth and enhanced shareholder returns through its $1 billion share repurchase program.
Key observations:
- 📈 Solid momentum: Up 13.35% year-over-year to $21.63 as of mid-November
- 💹 Recent consolidation: Trading in tight range around $22-23 suggests base building
- 🎢 Lower volatility: Relative stability compared to broader regional bank sector
- 📊 Institutional accumulation: 82% institutional ownership indicates strong confidence
Gamma-Based Support & Resistance Analysis
Current Price: $22.56
The gamma exposure map reveals critical price magnets and natural barriers around current levels - perfectly aligning with the butterfly spread strikes:
🔵 Support Levels (Put Gamma Below Price):
- $22.50 - Strongest nearby support with 1.02B total gamma (current price nearly touching this level!)
- $22.00 - Major floor with 5.28B gamma exposure (dealers will aggressively buy dips here)
- $21.00 - Secondary support at 1.58B gamma
- $20.00 - Deep support with 2.54B gamma (psychological round number)
🟠 Resistance Levels (Call Gamma Above Price):
- $23.00 - Massive resistance wall with 18.18B gamma (SHORT BUTTERFLY LEG!)
- $24.00 - Secondary ceiling at 6.86B gamma (LONG BUTTERFLY LEG - sweet spot!)
- $25.00 - Extended resistance at 2.00B gamma
- $26.00 - Major ceiling with 13.77B gamma (SHORT BUTTERFLY LEG!)
What this means for traders:
The gamma data perfectly validates the butterfly spread strategy! The enormous 18.18B gamma wall at $23 shows massive call option interest, creating natural resistance. The butterfly spread is positioned with short legs at $23 and $26 - exactly where gamma resistance sits heaviest. Market makers will hedge by selling stock as price approaches these levels, creating natural price caps. Meanwhile, the long $24 strike sits between resistance zones, representing the ideal "landing spot" for maximum profit. This setup suggests the trader has done their homework on options positioning!
Net GEX Bias: Strongly Bullish (62.18B call gamma vs 6.40B put gamma) - Overall positioning leans bullish but with defined resistance overhead creating range-bound expectations.
Implied Move Analysis
Options market pricing for upcoming expirations:
- 📅 Weekly (Nov 28 - 3 days): ±$0.38 (±1.70%) → Range: $22.16 - $22.93
- 📅 Monthly OPEX (Dec 19 - 24 days): ±$1.21 (±5.37%) → Range: $21.33 - $23.76
- 📅 Quarterly Triple Witch (Dec 19 - 24 days): ±$1.21 (±5.37%) → Range: $21.33 - $23.76
- 📅 February OPEX (Feb 20 - 87 days - BUTTERFLY EXPIRATION): ±$2.51 (±11.14%) → Range: $19.79 - $25.30
Translation for regular folks:
Options traders are pricing in a 1.70% move by end of this week (super tight!), a 5.37% move through December expiration, and an 11.14% move through February 20th expiration. That February range of $19.79-$25.30 perfectly encompasses the butterfly spread strikes at $23/$24/$26, suggesting the market believes FHN will stay within this zone. The relatively modest implied volatility supports the range-bound thesis underlying this butterfly strategy.
The February 20th expiration (when this butterfly expires) has an upper range of $25.30 - meaning the market thinks there's only a 16% chance FHN breaks above $25.30 by then. This aligns perfectly with the butterfly's limited profit zone between $23-$26, with maximum profit at $24.
🎪 Catalysts
🔥 Immediate Catalysts (Next 30 Days)
Q4 2024 Earnings - January 16, 2025 (52 DAYS AWAY!) 📊
First Horizon will report Q4 2024 results on January 16, 2025, positioned right in the middle of the butterfly spread timeline:
- 📊 Expected EPS: $0.38-$0.39 consensus, up 18.8% year-over-year
- 💰 Expected Revenue: $820.70-$822.47 million, up 2.8% year-over-year
- 📈 Efficiency Ratio: Expected 60.0% - strong operational leverage
- 💵 Net Interest Margin: Projected 3.3%
- 🏦 Average Total Interest Earning Assets: $76.23 billion
What to watch: First Horizon beat Q3 2024 earnings by $0.02 with EPS of $0.40 and showed strong momentum with adjusted EPS up 18% quarter-over-quarter. Key focus areas for Q4 include net interest margin trajectory, deposit retention rates (97% in Q3), loan growth continuation (up 1% in Q3), and credit quality (net charge-offs only 15 basis points in Q3). Any guidance on the $1 billion share buyback program pace will be critical.
Fixed Income Investor Materials - December 3, 2024 📄
First Horizon announced it will post fixed income investor materials on December 3, 2024 for analysts. These materials typically provide additional color on capital position, funding strategies, and potential strategic initiatives.
🚀 Near-Term Catalysts (Q4 2025 - Q1 2026)
$1 Billion Share Repurchase Program 💰
First Horizon's board authorized a new $1 billion share repurchase program in October 2024, replacing the prior $650 million program:
- 💵 $1 billion authorization expiring January 31, 2026
- 📈 Buyback yield of 2.44%
- 💎 Dividend yield: 2.96%
- 🎯 Total shareholder yield: 5.40% (combining dividends and buybacks)
The aggressive repurchase program provides a natural floor under the stock price and should support valuation multiples, perfectly aligning with the range-bound thesis. With $1B to deploy before January 31, 2026, expect consistent buying pressure through the butterfly expiration.
Federal Reserve Rate Cuts Impact 📉
The Federal Reserve has implemented 25 basis point cuts in September and October 2025, with more expected:
- 💹 Federal funds rate currently at 3.75%-4.00%
- 📊 65-71% probability of another 25 basis point cut at December 9-10 FOMC meeting
- 🏦 Expected benefits: Lower deposit and funding costs improving net interest margins
Positive for FHN: Regional banks like First Horizon typically benefit from declining rates as deposit costs fall faster than loan yields, expanding net interest margins. This could be a key driver for improved profitability in Q4 and Q1 2026.
Credit Rating Upgrades 📈
First Horizon received two significant credit rating upgrades in 2024:
- Moody's Outlook Upgrade (June 2025 reporting) - Upgraded outlook to "positive" from "stable", affirmed Baa3 long-term issuer rating citing strengthening regional banking franchise in Southeast
- Fitch Ratings Upgrade (October 4, 2024) - Upgraded long-term rating to "BBB+" from "BBB" with stable outlook
These upgrades improve FHN's borrowing costs and institutional credibility, supporting valuation multiples.
🤖 Strategic Catalysts (2025-2026)
M&A Strategy Evolution (2025-2026) 🏢
CEO Bryan Jordan stated in late 2024 that First Horizon is "increasingly confident in our ability to integrate a well-structured merger with a strong cultural fit in our existing footprint, if such an opportunity arises in 2026 or beyond":
- 🔄 Pivot from acquisition target to potential acquirer
- 🎯 Focus on strategic opportunities with cultural fit in Southeast footprint
- 📊 Comments described as "more pointed than in the past"
- ⚖️ Regulatory environment has "changed significantly" with new regime
Probability: Moderate (40-50%) - dependent on finding suitable targets with appropriate valuation and regulatory approval. Any M&A announcement would likely cause volatility, which could impact the butterfly spread.
2025 Full-Year Guidance 📊
Management provided 2025 full-year guidance:
- 📈 Adjusted revenues projected flat to up 4% (assuming 25 basis point rate cuts)
- 🏦 Low-single-digit percentage loan growth anticipated
- 💰 Net charge-offs projected in 0.15-0.25% range - excellent credit quality
- 💵 FY25 consensus EPS: $1.67 to $1.88
⚠️ Risk Catalysts (Negative)
Net Interest Margin Pressure 📉
Net interest margin at 3.31% in Q3 2024, down 7 basis points quarter-over-quarter, remains a primary concern:
- 📊 Below industry average of 3.25% as of Q4 2023
- ⚠️ Expected continued modest margin contraction in near term
- 💵 Each 10 basis point compression in NIM represents approximately $20-25 million in quarterly net interest income reduction
Intense Deposit Competition 🏦
Intensifying deposit pricing competition in the Southeast poses profitability challenges despite FHN maintaining 97% deposit retention in Q3.
Commercial Real Estate Concentration 🏢
Commercial and commercial real estate loans represent 76.5% of period-end loans as of September 30, 2024 - higher than peer average for regional banks, though Moody's views portfolio as conservatively underwritten.
🎲 Price Targets & Probabilities
Using gamma levels, implied move data, and upcoming catalysts, here are the scenarios for the February 20, 2026 butterfly expiration:
📈 Bull Case (25% probability)
Target: $25-$26 (upper butterfly wing)
How we get there:
- 💪 Q4 earnings beat expectations with EPS above $0.39
- 🚀 Net interest margin stabilizes or expands from Federal Reserve rate cuts benefiting deposit costs
- 🏦 $1 billion share buyback program accelerates, creating sustained buying pressure
- 📊 Strong FY25 guidance with revenue at high end of flat to +4% range
- 🏢 Potential M&A announcement with accretive deal in Southeast footprint
Impact on butterfly: If FHN rallies to $25-26 by expiration, the butterfly spread loses value as it exits the profit zone. Maximum loss occurs above $26 where the short call leg becomes expensive. However, losses are capped due to the long $24 call providing protection.
Key risks: Gamma resistance at $23 (18.18B) and $26 (13.77B) will make this move challenging without significant catalysts aligning simultaneously.
🎯 Base Case (60% probability)
Target: $23-$24.50 range (butterfly profit zone) ✅
Most likely scenario:
- ✅ Solid Q4 earnings meeting consensus of $0.38-$0.39 EPS
- 📱 Net interest margin showing early stabilization signs from rate cuts
- 💰 Consistent share buyback execution providing support at $22-23 levels
- 🔄 Trading within strong gamma support ($22.50) and resistance ($23-24) bands
- 📊 Deposit competition remains intense but manageable with 97% retention rates
- 🏦 Credit quality remains excellent with net charge-offs 15-25 basis points
This is the butterfly's sweet spot: Stock lands at $24 by February 20th expiration, allowing the trader to capture maximum profit of approximately $2.6M. The gamma exposure map, implied move ranges, and fundamental outlook all support this scenario as most probable. Regional bank stocks typically trade in tight ranges absent major catalysts, and FHN's strong institutional ownership (82%) suggests controlled volatility.
Why $24 specifically: The long call leg at $24 becomes maximum value here while both short legs ($23 and $26) expire worthless, creating ideal butterfly profit scenario.
📉 Bear Case (15% probability)
Target: $20-$22 (below butterfly zone)
What could go wrong:
- 😰 Q4 earnings miss or weak FY25 guidance disappoints
- 🏦 Net interest margin compression accelerates beyond expectations
- 💸 Deposit pricing competition intensifies, forcing higher funding costs
- 🏢 Commercial real estate credit deterioration given 76.5% portfolio concentration
- 📉 Broader regional bank sector selloff drags FHN lower
- 🤖 Failed M&A attempt or unexpected regulatory issues
Impact on butterfly: If FHN drops below $23 by expiration, all three call legs expire worthless, and the trader keeps the initial $2.6M premium collected. This is actually a profitable scenario for the butterfly spread! The strategy only loses money if the stock makes a large move in either direction beyond the wings ($23-$26 range).
Important note: The butterfly spread is designed to profit from stability. Even if the stock drops to $20, the trader's losses are capped and the initial $2.6M credit provides a substantial cushion.
💡 Trading Ideas
🛡️ Conservative: Stock Purchase at Support
Play: Buy FHN shares if price pulls back to $22.00-$22.50 gamma support
Why this works:
- 💎 Strong institutional ownership at 82% provides natural buying support
- 💰 Total shareholder yield of 5.40% (2.96% dividend + 2.44% buyback yield) offers attractive income
- 📊 Massive 5.28B gamma support at $22 level should limit downside
- 🏦 $1 billion buyback program provides consistent buying pressure
- ⏰ Q4 earnings catalyst on January 16th offers potential upside
Action plan:
- 👀 Set limit orders at $22.25 and $22.00 to accumulate on dips
- 🎯 Target exit at $24 (butterfly sweet spot, 6.86B gamma resistance)
- 🛡️ Stop loss at $21.50 (below major $22 gamma support)
- 💵 Collect quarterly dividends while holding
Estimated P&L:
- 📈 Upside to $24: +7.8% gain + dividends
- 📉 Risk to $21.50: -3.4% loss (defined and limited)
- ⏰ Time horizon: 2-3 months through Q4 earnings
Risk level: Low (stock with stop loss) | Skill level: Beginner-friendly
⚖️ Balanced: Bull Call Spread Targeting Butterfly Zone
Play: Buy February 20, 2026 bull call spread targeting $23-$24 range
Structure: Buy $22.50 calls, Sell $24 calls (Feb 20, 2026 expiration - same as butterfly!)
Why this works:
- 🎯 Targets the butterfly's profit zone at $23-24 where maximum institutional interest sits
- 📊 Defined risk spread ($1.50 wide = $150 max risk per spread)
- 🦋 Piggybacks on the institutional butterfly positioning that wants $24 at expiration
- ⏰ 87 days to expiration captures Q4 earnings on January 16th
- 🏦 Federal Reserve rate cuts and share buybacks provide fundamental support
- 📈 Massive 18.18B gamma at $23 suggests strong magnet effect pulling price toward that level
Estimated P&L:
- 💰 Net debit: ~$0.75-$0.85 per spread ($75-85 per contract)
- 📈 Max profit: $65-75 if FHN at/above $24 at February expiration (75-88% return!)
- 📉 Max loss: $75-85 if FHN below $22.50 (defined and limited)
- 🎯 Breakeven: ~$23.25-$23.35
Entry timing: Enter now or on any dip below $22.50 for better risk/reward
Why this is smarter than the butterfly: You get similar upside exposure with much less capital at risk ($75-85 vs thousands), defined maximum loss, and you benefit if the stock rallies to the butterfly's sweet spot at $24. You're essentially betting alongside the institutional butterfly trader!
Risk level: Moderate (defined risk spread) | Skill level: Intermediate
🚀 Aggressive: Replicate the Butterfly (ADVANCED ONLY!)
Play: Sell your own short call butterfly targeting $24
Structure:
- Sell 1x $23 calls (collect $1.20 premium)
- Buy 1x $24 calls (pay $0.85 premium)
- Sell 1x $26 calls (collect $0.30 premium)
(Feb 20, 2026 expiration)
Why this could work:
- 💸 Collect net credit of ~$0.65 per butterfly ($65 per contract, same as institutional trade!)
- 🎯 Maximum profit at $24 by expiration (60% probability base case)
- 📊 Gamma exposure map validates $23-26 trading range thesis
- 🦋 You're literally copying a massive institutional bet with similar risk/reward profile
- ⚡ If FHN stays stable (regional banks typically do), capture full premium
- 🔄 Implied move of 11.14% through February supports $23-26 range expectation
Why this could be challenging:
- ⚠️ COMPLEX 3-LEG TRADE requiring precise execution and understanding
- 📊 Need to manage three different options simultaneously
- 💰 Margin requirements: Broker will require capital for max loss scenario (~$35-40 per butterfly)
- 🎢 Earnings volatility on January 16th could create adverse price movement
- 📉 Loss occurs if stock moves significantly above $26 or stays below $23 at expiration
- 🏦 Assignment risk on short call legs if stock rallies sharply
Estimated P&L:
- 💰 Collect ~$65 credit per butterfly upfront
- 📈 Max profit: $65 if $23 < FHN < $26 at February 20 expiration (keep full credit + spread value)
- 📉 Max loss: ~$35-40 per butterfly if stock at/below $23 or at/above $26
- 🎯 Profit zone: $23.65 to $25.35 approximate breakevens
⚠️ WARNING: DO NOT attempt this trade unless you:
- Have experience trading multi-leg options strategies
- Understand butterfly spread mechanics and risk profiles
- Can monitor position through earnings volatility (January 16th)
- Have sufficient margin (broker may require $150-200 per butterfly)
- Know how to adjust position if price moves outside profit zone
- Understand this is a bet on stock stability, not directional movement
Risk level: EXTREME (complex multi-leg strategy) | Skill level: Advanced only
Better alternative for most traders: Use the Balanced bull call spread instead to capture similar upside with simpler execution and clearer risk definition.
⚠️ Risk Factors
Don't get caught by these potential landmines:
-
⏰ Q4 Earnings binary event on January 16, 2025: Results could create significant volatility just 35 days before butterfly expiration. Consensus expects $0.38-$0.39 EPS, but any miss or weak guidance could trigger sharp moves. Regional bank stocks can gap 5-10% on earnings surprises, which could push FHN outside the $23-26 butterfly zone.
-
💸 Net interest margin compression risk: NIM down 7 basis points to 3.31% in Q3 despite rate cuts. If deposit costs don't decline proportionally with Fed cuts, margins could compress further. Each 10 basis point compression = $20-25M quarterly profit hit. Industry "deposit paradox" where funding costs stay stubbornly high could persist longer than expected.
-
🏦 Intense deposit competition in Southeast: First Horizon maintained 97% retention but likely at cost of higher pricing. Regional banks are fighting aggressively for deposits, and competition expected to intensify in 2025. Any deposit outflows could force FHN to raise rates further, compressing margins.
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🏢 Commercial real estate concentration at 76.5%: Higher than peer average with exposure to office and construction segments vulnerable to economic downturn. While Moody's views portfolio as conservatively underwritten, any credit deterioration in CRE could trigger rapid repricing of regional bank stocks.
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🤖 M&A execution risk: CEO's "increasingly confident" comments about potential 2026 acquisitions introduce uncertainty. Failed TD Bank merger in 2023 is fresh memory. Any M&A announcement creates volatility risk, integration costs could depress margins, and regulatory approval uncertain. M&A probability 40-50% adds unpredictability to valuation.
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📉 Regional bank sector correlation: FHN doesn't trade in isolation. Broader selloff in regional banks (similar to March 2023 mini-crisis) could drag FHN down regardless of fundamentals. Sector multiple compression risk if investors rotate away from financials.
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💰 Butterfly strategy complexity: If you're replicating this trade, understand it's a precision bet requiring $24 landing spot. Small deviations matter enormously. Stock at $23.50 vs $24.50 creates significantly different P&L. Managing three legs through earnings volatility requires experience.
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📊 Gamma positioning could shift: The massive gamma levels at $23 (18.18B) and $26 (13.77B) reflect current options positioning. As contracts expire or traders adjust, these levels can shift, potentially invalidating the range-bound thesis. Monitor gamma exposure weekly.
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⚖️ Regulatory risk: As FHN approaches $100 billion in assets (currently $82.2B), may face enhanced regulatory requirements and increased compliance costs. Any unexpected regulatory announcements could impact valuation.
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📱 Limited loan growth at 1%: Modest Q3 loan growth suggests muted demand. If economy weakens, loan growth could stall further, limiting revenue expansion despite buybacks.
🎯 The Bottom Line
Real talk: A sophisticated institutional player just put $2.6M on the line betting that First Horizon trades in a tight $23-26 range through February 2026, with the sweet spot at exactly $24. This isn't a gamble - it's a calculated bet backed by gamma analysis, Federal Reserve rate cut tailwinds, aggressive share buybacks, and solid fundamentals.
What this butterfly spread tells us:
- 🎯 Institutional expectation: FHN stays range-bound around $23-24 through Q4 earnings and into February
- 💰 They're satisfied with collecting $2.6M premium betting on stability rather than explosive moves
- 📊 Risk/reward favors controlled trading range given $1 billion buyback support, 82% institutional ownership, and massive gamma walls
- 🦋 This type of butterfly spread is precision instrument used when traders have high conviction about specific trading range
If you own FHN:
- ✅ Hold through Q4 earnings if you're comfortable with 5-7% volatility potential
- 💰 Collect 2.96% dividend yield while benefiting from 2.44% buyback yield = 5.40% total return baseline
- 📊 Strong gamma support at $22-22.50 provides cushion for remaining position
- 🎯 Consider trimming 25-30% if stock rallies above $24.50 (approaching resistance)
- 🛡️ Set mental stop at $21.50 (below major $22 gamma support wall)
If you're watching from sidelines:
- ⏰ January 16, 2025 is the moment of truth for Q4 earnings - mark your calendar
- 🎯 Pullback to $22.00-$22.50 would be attractive entry (4.14B gamma support creates natural floor)
- 📈 Looking for confirmation that net interest margin stabilizes and Federal Reserve rate cuts benefit deposit costs
- 💡 Bull call spread ($22.50/$24) offers better risk/reward than replicating butterfly for retail traders
- ⚠️ This isn't a momentum stock - it's a value/income play with 5.40% shareholder yield
If you're interested in options:
- 🎯 Bull call spread targeting $23-24 zone offers simple way to play alongside institutions
- 💡 Risk only $75-85 per spread for potential $65-75 profit (75-88% return) if FHN reaches $24
- 🦋 Replicating the full butterfly requires advanced skills and margin - most traders should stick with simpler strategies
- 📊 Q4 earnings on January 16th creates volatility risk 35 days before February expiration - factor this into position sizing
Mark your calendar - Key dates:
- 📅 December 3, 2024 - Fixed income investor materials posted
- 📅 December 9-10, 2024 - FOMC meeting (65-71% probability of 25bp rate cut)
- 📅 January 16, 2025 - Q4 2024 earnings report (35 days before butterfly expiration!)
- 📅 February 20, 2026 - Butterfly spread expiration, monthly OPEX
- 📅 January 31, 2026 - $1 billion share buyback authorization expires
Final verdict: This butterfly spread is a textbook institutional "stability bet" on a solid regional bank with excellent fundamentals, strong capital return, and limited volatility expected. The gamma analysis, implied move data, and fundamental catalysts all support the $23-26 range thesis. For retail traders, the cleaner play is the bull call spread targeting $24, offering similar upside exposure with simpler execution and defined risk. Regional banks like FHN thrive in stable rate environments with consistent buybacks - exactly the setup we have heading into 2026.
The 60% base case of FHN landing at $23-24.50 by February is well-supported by:
1. $1B buyback providing natural buying support
2. Massive gamma walls at $23 (18.18B) and $24 (6.86B) creating magnetic effect
3. 82% institutional ownership limiting volatility
4. Implied move of 11.14% through February = $19.79-$25.30 range encompassing butterfly zone
5. Federal Reserve rate cuts benefiting deposit costs and margins
Bottom line: Smart money is betting on controlled stability, not explosive moves. Follow their lead with appropriate position sizing and risk management.
Disclaimer: Options trading involves substantial risk of loss and is not suitable for all investors. This analysis is for educational purposes only and not financial advice. The butterfly spread strategy is complex and suitable only for advanced traders with experience managing multi-leg positions. The Z-scores of 293.06x, 13.37x, and 9.88x reflect these specific trades' sizes relative to recent history - they do not imply the trades will be profitable or that you should replicate them. Always do your own research and consider consulting a licensed financial advisor before trading. Q4 earnings on January 16, 2025 create binary event risk with potential for significant volatility that could impact options positions.
About First Horizon Corporation: First Horizon is a prominent regional banking powerhouse with a $10.67 billion market cap, parent company of First Tennessee Bank operating 416 branches across the Southeast, offering commercial banking, consumer banking, wealth management, and specialty banking services in the National Commercial Banks industry.