eBay Inc (EBAY) Facing Bearish Bets

CNBC’s Dan Nathan presented an options trading case on eBay Inc. (NASDAQ:EBAY. Particularly, he mentioned that there was a buyer of 12,000 September 12 Weekly-Strike Puts, priced at $0.35. The purchase reveals the trader’s assumption that eBay Inc. (NASDAQ:EBAY) will be priced below $53.65 by the date the financial instruments expire.


“You don’t normally associate eBay with Apple Computers, but […] the new iPhone 6, to be launched or at least introduced on September 9, is going to have some form of Patent Payment Processing System. The logical takeaway would be – is this a threat to PayPal? We also know that eBay […] has been pushing for a PayPal spin-out and the latter company acknowledged that they are going to do so,” mentioned Dan Nathan.

It’s obvious that eBay Inc. (NASDAQ:EBAY) is under pressure due to the above considerations, and it influences negatively the expectations about the e-commerce giant’s stock price. We could have expected speculations on the company’s fall in prices after the recent rebound. However, this new transaction is approximately double in volume compared to the daily average. The risk may not repay and the future might be brighter that the expectations of the trader might indicate, yet eBay Inc. (NASDAQ:EBAY) can clearly infer that at least somebody is expecting it to fail.

“[…] it’s [eBay] been a massive underperformer. It’s got that recent bounce […] and I suspect the stock remains range-bound and this trader obviously was just playing for some cheap premium protection into a potential volatile event,” added Mr. Nathan.

It’s not long before we find out whether the bearish strategy pays out and by how much. However, it is more interesting to find out if others will follow up trying to fetch some benefits out of the soon to fall price of eBay Inc. (NASDAQ:EBAY) stock. A big surprise would be the case where the company manages somehow to break the cycle in its favor or, who knows, somebody might not consider this event such a big surprise after all.

Disclosure: none

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