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Options Signal End to JCPenney Run?

Chris McKhann|writer, OptionMonster
Monday, 23 Mar 2009 | 3:32 PM ET

J.C. Penny Company is pushing up to its highest level in months, but the largest options activity is setting a floor on the retailer.

JCP is up 7 percent to 18.51 in today's trade, and has rallied over the last two weeks from a multi-year low of 13.71. Yet institutional traders seem to think the run may be nearing an end.

More than 24,000 April 15 puts have changed hands, with one block of 17,509 trading for .25. As the trade has been almost entirely selling, the effect is to set a floor under the stock price.

The credit would be kept if the stock is above that 15 level at expiration. If the stock is below that level, however, the options would be assigned and the put seller will be obligated to buy the stock for 15.

This is a neutral to bullish position on JCP , as the sellers certainly do not see the stock well below that 15 level.

The author has no position in the company.

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Chris McKhann is an analyst and writer for OptionMonster.

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  Price   Change %Change
JCP
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