Bearish Three-Way Spread Trades on Groupon (GRPN)
Shares of Groupon (GRPN) are trading lower on the session by 3.40%, at $5.11. The stock has been mired in a sharp downtrend for the past nine months, falling over 80% over the time period.
With GRPN trading a buck above it’s 52-week low, one trader is taking the opportunity to buy downside on the name today.
A short while ago, the April 2013 $5.00 put was purchased 6,200 times, near the offer, for $1.15 just as the April 2013 $5/8 strangle was sold 6,200 times, on the bid, for $0.95. Given the respective open interest on all strikes, 1,043, 361, and 83 contracts, it is clear that this is fresh positioning.
At a net debit of $0.20, the trader is outlaying $124,000 to obtain a leveraged position to the downside. The max payout on the spread, $1.00, will be taken down if shares of Groupon close below $4.00 in April. This would represent a 400% return (~200% annualized), or a take home of $496,000.
30-day implied vol continues to pop, up 4.8% today to 101.75%. 10-day historical vol is ‘only’ registering 63.59%, though.
Groupon, Inc. is a local e-commerce marketplace that connects merchants to consumers by offering goods and services at a discount. Each day the company e-mails its subscribers discounted offers for goods and services that are targeted by location and personal preferences.
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