Bears ring register with $XRT

It took only minutes of trade for option traders to double their money on downside positions in the SPDR S&P Retail Fund (XRT) today.

Less than 15 minutes before the closing bell yesterday, our unusual tracking systems found that 9,000 Weekly $37 puts  expiring today, May 1, were purchased for $0.56 to $0.60 above open interest of 611 contracts with shares at $36.79.

Those puts have already traded up to $1.43 this morning, more than 2 times their purchase prices. The stock fell 3.02% at the same time, showing how quickly options can far outpace gains 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.

XRT was last lower by 2.59% at $35.73 this morning. The exchange-traded fund has fallen as Amazon (AMZN), a top holding, has declined post earnings along with the broader market.