JC Penney (JCP, news, chart) is seeing some bearish put spread trading Thursday. With shares trading down 12 cents to $31.23, 10,000 of the September 25 puts and 5,000 of the September 30 puts have traded. The activity appears to be part of a substantial 1 x 2 ratio spread. Just before 14:30 Eastern time, 4,851 of the January 30 puts traded offerside or for $4.00 a contract. At the same time, twice as many (9,702) of the January 25s traded midmarket for $2.00 a contract.

With open interest of 1,603 and 2,691, respectively, the activity has the hallmarks of an opening of a bearish spread. That is, the strategist is buying the 30s and selling twice as many 25s. By getting into the trade at even, there is no upside risk, but profits are substantial if JCP closes at $25.00 share at January expiration. The profit range is between $30 and $20, with significant losses possible if the stock really tanks.