EBAY – eBay, Inc. – Shares of the provider of online marketplaces are lower by 2.20% today to stand at $21.43. News reports reveal the firm signed an agreement with China Post Group and the U.S. Postal Service to nurture e-commerce between the two nations. One optimistic options trader initiated a bullish risk reversal on EBAY in the October contract. It looks like the investor sold 6,500 put options at the October $19 strike for a premium of $1.01 apiece in order to purchase the same number of calls at the higher October $26 strike for a premium of $0.55 each. The risk reversal player pockets a net credit of $0.46 per contract, and keeps the full credit received if shares of the underlying stock exceed $19.00 through October expiration. Additional profits are available to the investor if EBAY’s shares surge more than 21.3% over the current price to exceed $26.00 ahead of expiration day. Shares last traded above $26.00 back on April 21, 2010, when the stock touched an intraday high of $26.58.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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