CAL – Continental Airlines, Inc. – A large-volume put spread involving a total of 40,000 July contract put options was likely initiated by an investor bracing for a potential pullback in the price of the underlying in the next several weeks to July expiration. Shares of Continental Airlines are down 1.01% to $24.52 just after 12:45 pm (ET). It looks like the options strategist purchased 20,000 puts at the July $20 strike for an average premium of $0.28 apiece, and sold the same number of puts at the lower July $17 strike for a premium of $0.13 each. The net cost of the debit spread amounts to $0.15 per contract. The spread yields maximum potential profits of $2.85 per contract if CAL’s shares plunge 30.7% from the current price of $24.52 to settle at or below $17.00 by expiration day. Profits start to accumulate if shares of the U.S. carrier fall 19% to trade beneath the average breakeven price of $19.85. We note the July $17 strike puts traded at the asking price of $0.13 per contract, but the July $20 strike puts were marked to the middle of the market at $0.28 each. If the investor is actually initiating a credit spread, rather than a bearish debit spread, he pockets a net credit of $0.15 per contract and keeps the full amount received as long as shares exceed $20.00 through July expiration day. In the credit spread scenario, the investor could lose up to a maximum of $2.85 per contract if CAL’s shares nosedive down to trade below $17.00 by expiration in July.