Bears ring up profits in $SPG

Option traders have doubled their money on downside positions in Simon Property Group (SPG).

Back on March 7, Our proprietary programs flagged the purchase of 10,000 October $160 puts for $5.04 as part of a bearish spread with shares at $177.53. This was clearly a new position, as open interest in strike was a mere 12 contracts before the trade occurred.

Those puts traded for as much as $10.08 today, twice their purchase price. The stock fell 15.27% in the same time period, underscoring 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.

SPG is up 0.48% to $150.78 this afternoon, but the regional mall operator hit a 52-week low only a week ago.