Yahoo (YHOO, $23.02, down $5.65) just opened for trading and the stock is down 20+%. The stock will probably bounce off these lows but I don’t see much of a comeback for Yahoo. The put options are trading higher but the lower put strike prices (22.50 and 20) are not yet in-the-money. These options do not expire until May 16.

May 25 Put (YHQQE, $3.00, up $2.31)
May 22.50 Put (YHQQX, $1.50, up $1.13)
May 20 Put (YHQQD, $0.66, up $0.49)

If Yahoo rebounds, these puts will trade lower. It’s a little too risky to play these puts straight-up because of the volatility but there will be some volume. It will be interesting to see how Yahoo finishes the trading session today and the rest of the week. One thing is for certain though, Yahoo will have a lot of explaining to do with its shareholders if the stock price continues to fall.

Rick Rouse