Put seller regroups after Jones selloff
David Russell | email@example.com
optionMONSTER's monitoring programs detected the sale of 2,000 June 9 puts for $0.40. A block of 1,000 June 10 puts traded at the same time for $1.05, but volume was below open interest. This suggests that an existing short position was closed and rolled to the lower strike.
The investor had probably sold the June 10 puts at an earlier date, looking for JNY to hold above $10. But now that the stock has broken that level, he or she adjusted the trade to lower the level at which the stock must be purchased. The trader also paid $0.25 and doubled the number of contracts, increasing the risk of loss if the stock continues to decline.
JNY fell 0.54 percent to $9.15 on Friday and has lost more than one-quarter of its value in the last month. The owner of brands including Jones New York, Nine West, and Gloria Vanderbilt has benefited from higher prices but warned on April 25 that economic jitters and discounting by competitors were hurting orders.
The stock has bounced around $9 several times since last August, which could have led the put seller to feel confident that it will hold that level. (See our Education section)
Overall option volume was more than quadruple the daily average in the session.