$BBBY bears score big profits

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

On Oct. 27, Market Rebellion’s Unusual Option Activity Service flagged the purchase of 5,000 Weekly $23 puts expiring today, Oct. 30, for $0.33 to $0.56 with shares at $24.04. Volume was above the strike’s existing open interest of 1,651 contracts, indicating that this was fresh buying.

Those puts sold for $3.09 today, more than 6.5 times their average purchase price. The stock fell 17.14% in the same time period, illustrating how options can far outperform moves in their underlying shares on a relative basis.

This win for the bears comes after bulls added significant gains to their carts earlier this month, showing how option traders can find profits in both an up and down tape.

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 is down 2.58% to $20.00 in midday trade. The home-products retailer held its investor day on Wednesday, Oct. 28 providing a three year roadmap.