Option traders are showing a bearish bias toward Post Properties Inc. (PPS). The implied volatility level for PPS calls is at 35.90, while the implied volatility level for PPS puts is at 39.92---giving the stock a volatility skew of .90.

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Any time we see a volatility skew below 1.00---like we are seeing for PPS---it is an indication that PPS puts are more expensive than PPS calls. Typically, when puts are more expensive than calls, it means the demand for puts is greater than the demand for calls because investors believe the stock is going to fall in the future and they want to take advantage of that movement by buying puts. The volatility skew for PPS is especially compelling because a reading of .90 shows that option traders are pushing prices to the extremes.

Seeing the volatility skew on PPS, you may also want to look at a few of the other stocks in the REIT - Retail industry. Oftentimes, stocks within the same industry group are affected by the same fundamental factors and tend to move together. Kimco Realty Corporation (KIM) and Simon Property Group Inc. (SPG)---which are both part of the REIT - Retail industry.

Of course, the volatility skew for PPS may only be showing a bearish bias due to forces that only affect this stock. In that case, if you want to be more conservative in your option trading, you may want to look at doing a pairs trade---buying a call on one stock and buying a put on the other stock---between PPS and SPG or between PPS and KIM to hedge some of the risk you may take on by trading PPS alone.

On the other hand, seeing that PPS's volatility skew is showing a bearish bias, you may also want to look at employing one of the following strategies:

- Buying a put

- Selling a naked call

- Buy a vertical put spread

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