Options Trading 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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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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