$KKR puts spike overnight

Option traders nearly quadrupled their money today on bearish positions opened in KKR (KKR) only one session earlier.

Just yesterday, Market Rebellion’s proprietary programs found that 5,000 Weekly $28.50 puts expiring on Oct. 11 were bought in one print for $0.35 with shares at $29.41. That was clearly a new position, as open interest in the strike was only 21 contracts before the trade occurred.

Those puts traded for as much as $1.34 today, almost 4 times their purchase price. The stock fell 6.8% today, 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.

KKR is down 7.45% to $27.20 in late-day trading. The investment firm has large investments in China, where stocks are falling today after reports that the White House is considering limitations on investments in companies based in that country.