Bears book quick gains in $IBM

Bearish option positions opened at the beginning of this week in International Business Machines have already more than doubled in price.

On Dec. 17, Investitute’s proprietary programs flagged the purchase of 2,100 February $105 puts for $1.60 to $1.76 with shares at $118.49. This was clearly fresh buying, as volume was well above the strike’s open interest of 1,211 contracts before the trade occurred.

Those puts sold for $3.89 today, more than twice their purchase prices. The stock fell 6.4% in the same time frame, underscoring how options can far outperform 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.

IBM was down 1.84% to $110.94 today. The hardware and cloud services provider continued to fall after reports from Reuters yesterday citing that it and HP Enterprise (HPE) were attacked by China’s Ministry of State Security, leaving company and client data at risk.