Options Trading News

December 24, 2013  Tue 10:45 AM CT

Ctrip.com is giving up some of this week's gains, but one trader apparently believes that further downside will be limited in the Chinese online travel agency.

optionMONSTER systems detected the sale of 3,000 March 50 puts for the bid price of $4.80. Open interest in the strike was just 617 contracts before the trade appeared, showing that it is a new position.

The put seller is looking for CTRP to hold above $50 through expiration in mid-March, at which time the $4.80 credit would be kept as profit. The trader risks having to buy shares if they fall below that $50 level, but that might be his or her intent because the stock price is so close the strike. (See our Education section)

In that case, the effective purchase price would be $45.20 once the credit from the put sale is included. Traders sometimes sell puts this way in hopes of picking up a stock at a discount.

CTRP is down 0.91 percent to $50.16 today, pulling back from gains of the previous two sessions. It was below $50 this morning and as low as $46.63 on Friday.
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