Bears put their stamp on Pitney Bowes

optionMONSTER

Shares of Pitney Bowes have been cut nearly in half this year, and one large trade is apparently positioning for further downside.

optionMONSTER's systems show that 7,500 January 12 puts were sold for $1.30 and 15,000 April 10 puts were bought for $0.80. The volume was below the previous open interest in the January puts but above it in the April options, indicating that a long-put position was rolled forward.

This adjustment provides another three months for the strategy to work while moving the position to a lower strike price, reflecting the stock's downward trend. At the same time, the credit from the January put sale allows the trader to purchase twice as many April contracts.

Long puts lock in the price where the trader can sell the stock no matter how far it falls, but the contracts will expire worthless if PBI is above $10 at expiration in mid-April. (See our Education section)

PBI slipped 0.83 percent on Monday to close at $10.69, just off a new 52-week intraday low of $10.65 reached in the morning. The stock has lost about 46 percent since their 52-week high of $19.65 in early February.

Shares of the postage-meter company have been trending lower for years with the general decline in traditional mail. Most recently PBI gapped below several key moving averages on Nov. 2 after reporting disppointing third-quarter results.

Long puts lock in the price where the trader can sell the stock no matter how far it falls, but the contracts will expire worthless if PBI is above $10 at expiration in mid-April. (See our Education section)

Monday's trading pushed total option volume in PBI past 28,000 contracts, 6 times its daily average in the last month. Puts outnumbered calls by 16 to 1.

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