Bears are in driver’s seat at $THO

Option traders tripled their money on downside positions in Thor Industries today.

On Nov. 14, Investitute’s market scanners identified the purchase of 2,250 December $65 puts for $3.20 to $3.40 with shares at $69.23. This was clearly fresh buying, as open interest in the strike was only 386 contracts before that session began.

Those puts traded for as much as $9.60 this morning, 3 times their purchase prices. The stock fell 19.27% in the same time frame, illustrating how options can far outperform moves in their underlying shares on a relative basis.

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.

THO dropped 6.17% to close at $60.34 today. The recreational-vehicle manufacturer missed earnings and revenue expectations before the market opened this morning.