PLD – ProLogis – Shares of Prologis, a REIT that owns industrial properties in North America, Europe and Asia, are down 4.00% to $10.82 just after 1:00 pm (ET). Despite the sharp shift lower in PLD’s shares today, one optimistic trader opted to sell short 5,000 puts at the August $10 strike for a premium of $0.50 per contract. The put seller keeps the full $0.50 premium pocketed on the sale as long as shares of the underlying exceed $10.00 through August expiration day. The short stance in the puts implies the investor is willing to have Prologis shares put to him at an effective price of $9.50 each should the puts land in-the-money at expiration. An opposite-minded trader populating PLD options today took a longer-term bearish stance on the stock by purchasing 2,000 puts at the January 2010 $10 strike for a premium of $1.41 per contract. The put buyer in this case is positioned to make money as long as the REIT’s shares plummet 20.6% from the current price to breach the effective breakeven point to the downside at $8.59 by expiration day in January 2010.
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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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