Bears roam aisles in $TJX

Option traders are ringing up profits today on downside positions opened in TJX (TJX) only one session earlier.

On May, 18, Market Rebellion’s Unusual Activity Service found that 2,500 May $70 puts, expiring this Friday, were bought for $1.05 to $1.11 as part of a bearish spread with shares at $71.50. This was clearly fresh buying, as open interest in the strike was just 914 contracts before the activity appeared.

Those puts have traded up to $3.46 today, more than 3 times their purchase prices. The stock fell 6.83% in the same time frame, showing how quickly options can far outperform moves in the 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.

TJX was last down by 5.89% today at $66.89. The discount retailer announced a “significant” number of store closures for the back half of the year during its earnings report this morning.