Put Selling EBAY Stock for the Speculator

This year Facebook Stock is my speculative stock but there are so many other ones that other investors might be interested in. One of those has to be EBAY Stock. Stock symbol is EBAY. EBAY stock has a wonderfully checkered past. Over the past 5 years it has been as low as $9.91 in 2009 to the high of $57.27 just recently. Taking the various splits into account, EBAY Stock has almost reached its previous high from 2004 before it began a long decline which ended in 2009. I have a number of investor friends who engage in Put Selling against EBAY stock. They have brought in excellent returns by staying far out of the money with their put strikes and at the first sign of trouble they close immediately and then reassess for the next Put Selling opportunity in EBAY Stock.

Put Selling Opportunity in EBAY Stock

Today, EBAY Stock is declining pulling away from its most recent high. For those who love to speculate, Put Selling the $46 strike earns better than 1% and would see EBAY stock back to the lows of the last 6 months.

EBAY Stock September to March

Here are the put premiums for EBAY stock as of noon on March 15 2013. The $46 strike is certainly compelling for Put Selling and the $47 for the more adventurous brings in 1.5%.

Put Selling Premiums for April 20 expiry on EBAY Stock

Put Selling Support In EBAY Stock

Part of the reason for such good premiums for Put Selling is the chart below. Looking for support in EBAY Stock shows there is not much until you get down around $47. This makes a good case for Put Selling the $47 put strike.

There is very little support in the stock at $52 or even $51 so EBAY Stock could easily drift below $50.00 without any trouble. The market maker will be well aware of this which is part of the reason for the put premiums you see above.

Put Selling support levels for EBAY Stock

This also means it could be a good put buying opportunity which is not something that interests me but I am sure lots of other investors would be. Credit spreads would probably do well for calls although with the stock down this much I wouldn’t be surprised to see it bounce back which would hurt a call credit spread.

Put Selling Looks Best

That then brings me back to Put Selling as probably the safest and easiest trade to consider as EBAY stock continues to fall. The nice thing is an investor can scale into Put Selling EBAY Stock due to the premiums. An investor can take small positions as the stock tries to bottom which could easily be a few more days or even longer. There is a lot to like about Put Selling EBAY Stock during this recent decline.