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LinkedIn Options Trading Points to Downside

Friday, 27 May 2011 | 12:44 PM ET

Options on shares of LinkedIn started trading Friday and the clear bias is to the downside. Strike prices are listed from $50 to $140 with expirations ranging from June 2011 through February 2012. Initial indications from the CBOE had been for a tighter range of strikes starting with $75 puts on the downside and $115 calls on the upside.

According to Bill Lefkowitz of vFinance Investments, early LinkedIn trading indicates puts are trading at a premium to calls in price and are also, trading bigger size. As of about 10am ET, roughly 1000 June puts had traded while just 300 calls had changed hands.

And the bias continues through next year, he says: February 2012 $50 puts have traded at $5.00, with $125 calls in the same time frame trading at $2.05 — current activity for the CBOE can be seen on their website.

Jon Najarian, co-founder of Optionmonster.com and a frequent CNBC contributor, notes via Twitter that despite the put premium, arbitrage opportunites are limited in part by the cost of borrowing shares. Pricing on Quadriserv's website indicates offers to borrow shares are still in excess of 100 percent annually.

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