Bearish $KRE positions gain nearly 3-fold overnight

Bearish positions opened yesterday are returning big gains in the SPDR S&P Regional Banking Fund (KRE) today.

Just yesterday morning, Investitute’s tracking systems detected the purchase of 8,000 Weekly $54 puts, expiring on 30August, as part of a bearish spread and roll, for $0.83 with shares at $55.10. This was clearly a new position, as open interest in the strike was only 7 contracts before that session began.

Those puts traded for $2.35 today, nearly 3 times their purchase price. The stock has fallen 5.17% in the same time period, a large move in just over 24 hours, 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 is currently down 0.96% to $52.32 at mid-session. The exchange-traded fund has fallen along with the broader market, after the Federal Reserve cut interest rates on Wednesday, for the first time in eleven years, by 0.25% and U.S. President Trump announcing an additional round of 10% tariffs on $300 billion worth of Chinese imports yesterday.