$AMTD puts soar 5-fold in days

It took just one week for option traders to score exponential profits on bearish positions in TD Ameritrade.

On Nov. 29, Investitute’s market scanners found that 3,000 Weekly $52.50 puts were purchased for $0.45 as part of a bearish roll with shares at $53.92. This was clearly a new position, as open interest in the strike was a mere 6 contracts before that session began.

Those puts traded for $2.56 this afternoon, more than 5.5 times their purchase price. The stock fell 7.38% in 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.

AMTD was down 3.45% today to close at $49.58. The discount brokerage has fallen with other financial names as it faces increasing competition.