EBAY loses $1.30 to $38.65 in active trading of 9.6 million shares and has now lost 9 percent heading into its earnings release, due out Wednesday after the closing bell. One player in the options market appears to be anticipating additional weakness in the online auctioneer and sold an Aug 33 – 43 risk-reversal on EBAY at a penny, 11700X to open. The new position traded on ARCA and a source informs us that calls were sold to buy puts. An EBAY shareholder might have initiated the trade to “collar” the stock ahead of the profit report. The stock rallied 13 percent on 4/19 when results were last reported. Implied volatility is moving up 7.5 percent to 40.5 ahead of the next report.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.