Bearish Strategy in Barnes & Noble

Investors are bracing for another lousy quarter from Barnes & Noble tomorrow morning.

optionMONSTER’s Depth Charge monitoring program detected the purchase of 4,000 December 16 puts for $1.25. Equal-sized blocks were sold in the December 17 calls for $0.47 and the December 14 puts for $0.32 at the same time. Volume was more than twice open interest at all three strikes, indicating that new positions were initiated.

It cost $0.46 to open this combination trade, which will expand to $2 if the book retailer closes at or below $14 on expiration. The investor is also on the hook to sell shares for $17 if they go over that level, so he or she is probably looking to hedge a long position.

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