$BBBY bears bag quick profits

Option traders are bagging major profits on bearish positions in Bed Bath & Beyond (BBBY) today.

On Sep. 29, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,000 Weekly $20 puts, expiring this Friday, Oct. 8, for $0.73 to $0.76 with shares at $22.35. Open interest in the strike was only 295 contracts before the trade occurred, showing that this was a new position.

Those puts traded for as much as $5.69 this session, at least 7 times their purchase prices. The stock fell by 36.02% in the same time frame, illustrating the kind of leverage that can be achieved with options.

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.

BBBY was down 4.06% to $14.42 at the close.