Options Brief: eBay (EBAY)

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.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

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.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

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