$INDA put prices soar 5-fold in days

Bearish iShares MSCI India ETF (INDA) option traders who opened downside positions just three days ago are already seeing exponential gains.

On Tuesday, Feb. 25, our Unusual Activity Tracking systems found that 10,000  Weekly $32.50 puts expiring Mar. 6, were bought in one print for $0.30 with shares at $34.15. This was clearly fresh buying, as there was no open interest in the strike before the session began.

Market Rebellion co-founder Jon Najarian noted the activity during his live stream during that trading day.

Those puts traded for as much as $1.65 today, more than 5 times their purchase price. The stock declined 7.12% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

INDA ended today down by 3.03% to $32.19. The iShares MSCI India ETF, which tracks a basket of Indian equities, fell as concerns surrounding the COVID-19 Coronavirus increased around the world.