Options Trading News

November 29, 2013  Fri 11:50 AM CT

J.C. Penney has seen its share price cut in half this year, but one trader is hoping for a quick pop.

Dominating today's JCP option volume is one transaction in the December Weekly contracts that expire next Friday. A trader sold 10,000 of the 9.50 calls for $0.76 and bought 10,000 of the 10.50 calls for $0.23 today, optionMONSTER's Heat Seeker system. Volume was below previous open interest in the lower-strike contracts but above it in the higher strike, indicating that a position was rolled higher.

The trader is apparently taking some money off the table and opening new long calls at a strike that is $1 higher. But these contracts will expire worthless if shares remain below the $10.50 strike price. (See our Education section)

JCP is down fractionally to $10.04. Shares had trended steadily lower since beginning the year above $20, but the stock has regained some ground in the last month as management claims that a sales turnaround is taking hold at the beleaguered department-store operator.

Total JCP option volume exceeds 82,000 contracts today, surpassing its full-session average on this truncated trading day. Overall calls outnumber puts by about 2 to 1. 
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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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