Options News
Bears ring register in $KR
Krogers fell sharply on poor earnings and revenue today, resulting in large profits on downside option positions. On Jan. 24, Investitute’s proprietary programs flagged the purchase of 10,300 March $30 puts for $1.98 to $2.18 with shares at $28.82. Open interest in the strike was a mere 14 contracts before that session began, showing that […]
Krogers fell sharply on poor earnings and revenue today, resulting in large profits on downside option positions.
On Jan. 24, Investitute’s proprietary programs flagged the purchase of 10,300 March $30 puts for $1.98 to $2.18 with shares at $28.82. Open interest in the strike was a mere 14 contracts before that session began, showing that this was a new position.
Those puts traded for as much as $5.30 today, more than 2.5 times their average purchase price. The stock fell 14.37% in the same time period, illustrating how options can far outperform moves in 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.
KR dropped 9.95% to $25.61 today. The grocery chain missed quarterly estimates and lowered its full-year guidance before the market opened this morning.