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February 20, 2013  Wed 10:07 AM CT

JPM: SEE CHART GET CHAIN FIND STRATEGIES
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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Options Academy: At the Break

So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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