U.S. Markets close in 35 mins.

Spread positions for drop in eBay

Chris McKhann (chris.mckhann@optionmonster.com)

A complex three-way spread is looking for shares of eBay to fall by the middle of next year.

optionMONSTER systems show that a trader sold 6,750 July 55 calls for $3.85 yesterday, below the listed bid price at the time. He or she also bought the same number of July 70 calls for $0.63 and July 50 puts for the ask price of $3.1. Volume was above the previous open interest in all three strikes, indicating that new positions were established.

This combination spread takes in a credit of $0.12, which will be kept as profit if EBAY is between $50 and $55 at expiration. Further profits will come if shares fall below $50. (See our Education section)

EBAY lost 1 percent yesterday to close at $52.58, in the middle of its recent range. The online auction giant hit a 52-week low of $48.06 at the end of November. 

More From optionMONSTER