EBAY – eBay, Inc. – It looks like one trader may have sold call options on the online marketplace operator as part of a buy-write strategy in the expectation that EBAY’s shares will rebound by October expiration. eBay’s shares commenced the session higher, but quickly reversed course in the first 30 minutes of the trading day, slipping as much as 2.00% to an intraday low of $24.08. The investor appears to have combined the purchase of EBAY shares for approximately $24.12 each with the sale of 3,000 calls at the October $25 strike for premium of $0.57 apiece. Premium received on the sale of the calls effectively reduces the price paid to get long shares of the underlying to roughly $23.55 each. Thus, the transaction positions the investor to reel in maximum gains of 6.15% should shares rally above $25.00 by expiration day next month.
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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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