$AMD puts spike 9-fold overnight

Bearish option traders racked up exponential gains before Advanced Micro Devices rebounded today.

Just yesterday, Investitute’s market scanners found that 8,000 Weekly $18 puts expiring on Nov. 23 were purchased for $0.09 to $0.15 with shares at $19.46. There was no open interest in the strike before the trades occurred, showing that this was fresh buying.

Those puts traded for as much as $1.10 this morning, more than 9 times their average purchase price. The stock fell 11.41% at the same time, underscoring how 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.

AMD opened this morning at $17.40 and rose to $19.58 before closing at $19.21, up 0.52% on the session. The chip maker was trading near $23 before dropping on disappointing quarterly results last month.