eBay has been fighting its way higher amid an improving
financial backdrop, and one investor seems confident that it will
hold its ground.
optionMONSTER's tracking systems detected the sale of more than
7,000 January 28 puts for $0.73 against open interest of 5,234
contracts. The trade accounted for about half the options volume in
the online auction stock so far today.
EBAY fell 0.30 percent to $30.22 afternoon trading but is up 29
percent in the last three months. Some gains occurred on Oct. 21
after the company reported better-than-expected earnings and issued
Most of the strength came from its PayPal payment service, though
there was also evidence that its online marketplaces are gaining
traction. The news followed weak reports in July and April. The
company also recently priced its first bond sale to exploit the low
That was positive enough to make the shares gap higher. Today's
option trader is looking for that gap to provide support into the
New Year. The investor would then keep the $0.73 earned as long as
EBAY stays above $28.
If it falls below that level, the trader will have to buy the stock
for $28. Investors often write puts on stocks they like as a way to
earn income and are willing to own on a pullback. (See our
(Chart courtesy of tradeMONSTER)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.