$AFL bears double their money

Aflac traded lower again today, handing sizable profits to downside option traders.

On June 25, Investitute’s market scanners found that 3,000 Weekly $43 puts expiring on July 6 were purchased, as part of a bearish roll, from $0.19-0.22 with shares at $43.94. Volume was well above the strike’s open interest of 3 contracts, indicating that this was fresh buying.

Those puts sold for $0.48 today, more than double their purchase price. The stock dropped 2.73% at the same time, underscoring how quickly options can far outperform moves in their underlying shares.

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.

AFL opened trade today to an intraday low of $42.56 before climbing its was back higher to close off 0.30% on the session, or $42.89. The insurance provider has been declining for the past 11 sessions.