Jefferies Group reports earnings tomorrow morning, and at least
one trader is positioning for a potential decline.
optionMONSTER's Depth Charge tracking system detected the purchase
of 1,500 May 25 puts for $0.40 and the sale of a matching number of
May 22.50 puts for $0.05. The transaction cost a net debit of
JEF is up 0.55 percent to $27.55 this morning and has risen 16
percent so far this year. That outpaces the performance of
competitors such as Morgan Stanley and Goldman Sachs, plus the
Financial Select Sector SPDR exchange-traded fund (
Today's options strategy, a bearish put spread, is designed to
leverage a decline in JEF and will earn a 614 percent profit if the
stock closes at or below $22.50 on expiration.
The trade comes one session after GS plunged on a fraud lawsuit by
the Securities and Exchange Commission, which may cause some
investors to worry about downside in other investment banks. JEF
has emerged from the financial panic as a new major player,
allowing it to record huge revenue gains in recent quarters.
The options trade pushed overall options volume in the stock to
four times greater than average so far today. Puts account for 97
percent of the activity.
(Chart courtesy of tradeMONSTER)
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