Bears target eBay for second day
Chris McKhann | firstname.lastname@example.org
optionMONSTER systems detected the purchase of 5,000 January Weekly 52.50 puts that expire at the end of next week for $1.26. The trader sold the same number of the 47.50 puts for the bid price of $0.04.
There was no open interest at these strikes, so this is a new vertical spread that is preparing for a pullback in shares of the online auction giant. Using spreads going into earnings makes sense given the inflated premiums, as noted in this week's Advantage Point newsletter, though the sale of a $0.04 put doesn't seem worthwhile.
EBAY is up 1 percent to $53.48 this morning. Earnings are scheduled for Jan. 22 after the close, two days before these put spreads expire. The implied volatility of those Weekly puts is above 47 percent, compared to 35 for the February options and the stock's 20-day historical volatility of 22 percent.
Yesterday the name saw a January Weekly 52/47 put spread in the same expiration.