Bearish $KRE positions gain 3-fold

Bearish positions returned big gains on downside positions in the SPDR S&P Regional Banking Fund today.

On May 6, Investitute’s tracking systems detected the purchase of 43,179 June $54 puts, as part of a bearish spread, for $0.88 with shares at $56.56. This was clearly a new position, as open interest in the strike was only 7,041 contracts before that session began.

Those puts traded for $2.95 today, over 3 times their purchase price. The stock fell 8.45% in the same time period, a large move but nowhere near that of its 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.

KRE was down 2.3% to close at $61.87 today. The exchange-traded fund has fallen along with the rest of the financial sector during the month of May as yields continue to decline.