GAP – Great Atlantic & Pacific Tea Co., Inc. – Investors bought put options on the operator of conventional supermarkets, combination food and drug stores and discount food stores today with shares of the underlying stock trading lower by 4.45% to stand at $4.08 as of 2:38 pm (ET). Pessimistic traders expecting GAP’s shares to continue to decline purchased approximately 1,400 put options at the January 2011 $2.5 strike – the lowest strike price available – for an average premium of $0.375 per contract. Put buyers stand prepared to profit if GAP’s shares plummet 48% from the current price of $4.08 to breach the average breakeven point to the downside at $2.125 by expiration day in January. The demand for put options on Great Atlantic & Pacific Tea Co., Inc. today lifted the stock’s overall reading of options implied volatility 7.5% to 92.55% just before 2:50 pm (ET).
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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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