eBay has pulled back from seven-year highs in the last week, and one trader is looking for more downside in the next month.
EBAY fell 2.6 percent to close at $48.03. The online auction giant was above $50 for much of last week, its highest levels since 2005, after trading near $28 last November.
A trader bought 5,000 October 48 puts for the ask price of $1.38 while selling 10,000 October 45 puts for the bid price of $0.43, according to optionMONSTER's Depth Charge tracking system. The volume at each strike was almost twice the previous open interest, indicating that this is a new ratio spread .
The put spread is designed to profit from a moderate decline by mid-October, generating a maximum gain if EBAY falls to $45. Below that level, the trader faces the possibility of assignment and the obligation to buy more shares. (See our Education section)
More From optionMONSTER