Puts on LinkedIn

Puts on LinkedIn were recently selling for nearly $20 for a $75 stock. The LinkedIn IPO started at $45 and rose to over $90 on the first day. This is on a stock with a thousand to one price to earnings ratio. The fact that puts on LinkedIn were priced so high would seem to tell us that options writers were betting on a further significant fall in the LinkedIn stock price. The fact that people are buying a stock with a thousand to one price to earnings ratio reminds us of the glory days of the dot com bubble. In the late 1990’s virtually all one had to do was put .com at the end of a company name in order to sell an internet related stock.