Bears double money in $INFY

Option traders are logging large profits on downside positions in Infosys (INFY) today.

On Aug. 14, Market Rebellion’s proprietary programs flagged the purchase of 10,000 January $11 puts for $0.85 to $0.90 with shares at $10.87. This was clearly fresh buying, as open interest in the strike was only 1,051 contracts before that session began.

Those puts traded for $2.10 today, more than twice their purchase prices. The stock fell 17.11% in the same time period, 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.

INFY is down 1.93% to $9 in early trading today. The IT service firm’s stock fell sharply yesterday on reports that whistleblowers had accused CEO Salil Parekh of overseeing irregular accounting.