Bears ring register in $ASNA

Downside option positions are racking up big gains as shares of Ascena Retail (ASNA) have fallen below $1 after quarterly results.

Back on Dec. 11, Investitute’s market scanners identified the purchase of 5,000 June $4 puts for $1.20 as part of a bearish roll with shares at $3.52. This was clearly a new position, as open interest in the strike was a mere 31 contracts before that session began.

Those calls traded for $3.02 today, more than 2.5 times their purchase price. The stock plummeted 72.16%, a huge move but one that is still well below 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.

ASNA is down 6.03% to $0.98 in late afternoon trading. The retailer, whose brands include Ann Taylor, Lane Bryant, and Justice, reported revenues that fell short of expectations after the market closed yesterday.