Options Activity Alert: EBAY, IR, PLD

EBAY – eBay, Inc. – Options on eBay, Inc. are active today as traders await the Company’s first-quarter earnings report due out after final bell. Shares in the provider of secure online payment services and online marketplaces are off slightly, trading 0.15% lower on the session at $36.03, as of 12:20 p.m. in New York. Signs some traders are prepping for a potential post-earnings report pullback in the price of eBay’s shares cropped up roughly 15 minutes into the trading day. Put volume at the May $34 strike exceeds 8,000 contracts versus just 322 previously existing positions, with most of the puts having been purchased this morning for an average premium of $0.78 apiece. Put buyers may be taking an outright bearish stance on the stock, or could be hedging long positions in the shares prior to the earnings release. Traders buying put options outright profit at expiration if EBAY shares drop 7.8% to breach the average breakeven price of $33.22. Overall options volume on the stock is approaching 45,000 contracts in early-afternoon trade, which is roughly 2.5 times EBAY’s 90-day average options volume read at 17,320. Call options are more active than puts at present, with around 1.25 call options trading for each single put option in play.

IR – Ingersoll-Rand PLC – Options volume on the provider of industrial and security technologies and products is up sharply today, with some 9,500 contracts in play this afternoon versus the stock’s 90 day average volume of 958 contracts. The bulk of the trading traffic is in the front month calls ahead of the Company’s first-quarter earnings report on Friday morning. Shares in Ingersoll-Rand are currently up 0.60% at $40.31 as of 12:45 p.m. ET. April $41 strike calls are seeing the heaviest volume, with more than 7,200 contracts trading against 1,614 open positions. It looks like the majority of the calls were purchased at an average premium of $0.40 each. Call buyers stand ready to profit at expiration in a couple of days should IR’s shares rally at least 2.7% to top the average breakeven price of $41.40.

PLD – Prologis, Inc. – A three-legged options combination trade initiated on Prologis this morning appears to be a near-term bearish bet that shares in the name will come under pressure during the next four weeks to expiration. The spread could be profitable if shares in Prologis sell off after the Company’s first-quarter earnings report on May 1st. Shares in the owner, operator and developer of industrial real estate are down 1.2% to stand at $34.26 as of 12:00 p.m. in New York. It looks like the strategist responsible for the single-largest transaction in PLD options today sold 1,000 calls at the May $37 strike in order to partially offset the cost of buying the May $31/$34 put spread, all done for a net premium outlay of $0.55 per contract. Profits are available on the spread in the event that Prologis shares decline 2.4% to breach the effective breakeven price of $33.45, while maximum potential profits of $2.45 per contract amass on the downside as long as shares drop 9.5% to settle below $31.00 by expiration next month. Shares in PLD last traded below $31.00 in mid-January.

About Caitlin Duffy 373 Articles

Affiliation: Interactive Brokers

Caitlin Duffy joined Interactive Brokers in 2009. In her role as Equity Options Analyst, Caitlin provides daily market commentary; highlighting various options trades, trading patterns and strategies of interest. Through Interactive Broker's webinar program, Ms. Duffy presents a number of educational, options-related events describing the theoretical pricing of options, the option Greeks as well as options strategies.

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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