One institutional trader is looking for J.C. Penney to reach its lowest levels since March 2009.
JCP was down 0.7 percent on Friday to close out the week at $22.56. Shares of the department-store chain have collapsed from a 52-week high of $43.18 in early February to a 52-week low of $21.57 last Tuesday.
More than 107,000 JCP options traded on Friday, with puts outpacing calls by almost 9 to 1. Its daily volume has averaged 13,000 contracts in the last month.
A trader sold 50,000 November 17 puts for the bid price of $0.96 and, seconds later, bought 25,000 November 21 puts for $2.34, according to optionMONSTER's Depth Charge system. The volume at each strike was under 1,000, so this is a new ratio spread .
The put spread cost the trader a net $0.42 to open, which is the amount that will be at risk if shares remain above $21 through expiration. The maximum gain would come if shares fall to $17 by that time. Below $17 and the trader faces assignment and the obligation to buy the stock.
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