$ALLY option bears score

Bearish option traders are hitting big profits in downside positions on Ally Financial Inc (ALLY)..

On Jan. 24, Market Rebellion’s Unusual Option Activity Service found that 18,000 March $28 puts were bought for $0.65 to $0.70 as part of a bearish spread, above the existing open interest of 10,322, with shares at $31.56.

Those puts have traded up to $7.00 so far this session, over 10 times their purchase prices. The stock declined 29.78% in the same time period, a large move but nowhere near that of its options 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.

ALLY was last down 9.45% at $23.38.