Bearish bets in $SPY turn fast gains

Bearish option traders collected fast gains as the SPDR S&P 500 Fund (SPY) dropped today.

Last Friday, Apr. 17, our Unusual Activity Service found that 18,000 Daily $285 puts expiring tomorrow, Apr. 22, were bought for $4.69 to $4.90 above open interest of 324 contracts with shares at $284.74.

Those puts have traded for as much as $13.00 so far today, nearly 3 times their purchase prices. The stock fell 4.47% in the same time frame, underscoring how options can far outperform moves in their underlying shares.

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.

The SPDR S&P 500 Fund (SPY) was last down 2.63% today at $274.18. Continued volatility in crude oil prices combined with global economic concerns surrounding the coronavirus have weighed on investors.