J.C. Penney draws 'nickel strategy'
Chris McKhann | firstname.lastname@example.org
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.