Bears ring the register in $M

It took just three days for option traders to double their money on downside positions in Macy’s (M).

Market Rebellion’s tracking systems detected bearish activity in the same strike on two consecutive sessions this week:

–On Sept. 18, 4,900 October $15 puts were purchased for $0.25 to $0.29 above open interest of 1,011 contracts with shares at $16.36.
–On Sept. 19, 11,000 October $15 puts were bought for $0.24 to $0.32 above open interest of 5,220 contracts with shares at $16.30.

Those puts traded for as much as $0.54 today, more than twice their initial purchase price. The stock fell 6.13% in the same time frame, underscoring how options can far outperform moves in their underlying shares on a relative basis.

It is the second winning downside trade in the name posted on Market Rebellion in a little over a month.

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.

M closed today down 1.97% to $15.41. Shares have declined steadily this week since the struggling department-store operator announced Tuesday evening that it is searching for a new CEO to run its BlueMercury cosmetics chain.