Bears make quick gains in $RL puts

Bearish option traders scored big in Ralph Lauren today, on positions opened after the apparel icon reported earnings.

On Jul. 30, Investitute’s market scanners found that 2,100 Weekly $106 puts that expire tomorrow, 02August, were purchased for $0.71 to $0.80, as part of a bearish spread, with shares at $108.60. Open interest in the strike was a mere 95 contracts before the trades occurred, showing that they were new positions.

Those puts are currently marked for for $6.60, more than 8 times their average purchase price. The stock has fallen 8.55% in the same time frame, illustrating the kind of leverage that can be achieved through 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.

RL is currently lower on the day by 4.69% at $99.34 after new tariffs against Chinese imports have been announced by President Trump, slated to go into effect September 1.