Market News

February 20, 2013  Wed 10:07 AM CT

JP Morgan is seeing an unusual put spread as shares trade just off yesterday's highs.
optionMONSTER systems show that a trader bought 5,000 March 49 puts for the ask price of $0.75 and, at the same time, sold 5,000 May 49 puts for the bid price of $1.79. Volume was higher than open interest at each strike, so this is new activity.

The trade is a short calendar spread, which uses the sale of longer-term options to offset the cost of nearer-term contracts. Such a strategy is used to profit from big moves in the stock, but time decay will eat away at the position. (See our Education section)

JPM is down 0.63 percent today at $49.14 after trading as high as $49.68 in yesterday's session. Shares of the banking giant have been trending up from support at $37 since the start of September. 
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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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