Bears score as $NTR plunges

Downside option positions have grown into fast profits today as Nutrien (NTR) made a new 52-Week low.

On Feb. 27, Market Rebellion’s Unusual Activity Service flagged the purchase of 6,000 June $40 puts as part of a bearish roll for $2.30 to $2.33 with shares at $40.74. This was clearly a new position, as open interest in the strike was a mere 849 contracts before that session began.

Those puts traded for $9.10 today, more than 3 times their purchase prices. The stock dropped 18.36% in the same time frame, 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.

NTR fell 5.6% to close at $32.00 today, just off its new low of $31.68. The Canadian potash and nitrogen fertilizer producer has fallen sharply this year-to-date.