Options Trading News

November 15, 2013  Fri 11:38 AM CT

A large trade is looking to profit if J.C. Penney avoids crashing next year.

Total option volume in JCP tops 146,000 contracts, more than double its daily average for the last month. Topping that volume is one print in the January 2015 4 puts.

optionMONSTER systems show that 12,500 of those contracts were sold for the bid price of $0.74. The volume was triple the previous open interest, so this clearly a new position.

The put seller is looking for JCP to hold above that $4 level in the long term. This another "nickel strategy," as the trader is looking to collect the small premium with a high probability of profit. Because of the low cost of the stock and the long-term nature of the puts, this selling carries less risk than most. (See our Education section)

JCP is up 5.64 percent to $9.18 this morning. The department-store operator has been on the move higher from a low of $6.24 three weeks ago. Shares were near resistance at $20 into the end of May.
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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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