Options Trading News

November 21, 2012  Wed 3:16 AM CT

Shares of J.C. Penney are just off four-year lows, and one long-term trade is anticipating even more downside.

A trader bought 10,000 January 2014 10 puts for $1.39 on a wide bid/ask spread, optionMONSTER's Depth Charge tracking system shows. Open interest in the strike was just 517 contracts at the beginning of the day, so this is a new position.

The put buying wasn't tied to any trading in the underlying stock identified by our scanners. It could be hedging, but that seems very unlikely given how far out of the money they are. So it appears to be a straightforward bearish play that is looking for JCP to fall below $10 by expiration in early 2014. (See our Education section)

JCP was up 2.93 percent yesterday to close at $17.24. The struggling department-store operator fell to $15.69 on Friday, its lowest level since March 2009.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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