Options Trading News

One institutional trader is looking for J.C. Penney to reach its lowest levels since March 2009.

JCP was down 0.7 percent on Friday to close out the week at $22.56. Shares of the department-store chain have collapsed from a 52-week high of $43.18 in early February to a 52-week low of $21.57 last Tuesday.

More than 107,000 JCP options traded on Friday, with puts outpacing calls by almost 9 to 1. Its daily volume has averaged 13,000 contracts in the last month.

A trader sold 50,000 November 17 puts for the bid price of $0.96 and, seconds later, bought 25,000 November 21 puts for $2.34, according to optionMONSTER's Depth Charge system. The volume at each strike was under 1,000, so this is a new ratio spread.

The put spread cost the trader a net $0.42 to open, which is the amount that will be at risk if shares remain above $21 through expiration. The maximum gain would come if shares fall to $17 by that time. Below $17 and the trader faces assignment and the obligation to buy the stock.