Bears score huge gains in $W

Option traders have nearly tripled their money on downside positions in Wayfair (W).

On Oct. 18, Market Rebellion’s proprietary programs flagged the purchase of 2,400 November $120 puts for $14 to $14.70 with shares at $111.18. This was clearly fresh buying, as open interest in the strike was only 446 contracts before that session began.

Those puts are marked at $38.05, almost 3 times their initial purchase price. The stock dropped 26.33% in the same time period, a large move but nowhere near that of its options 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.

W hit a session low of $81.44 this morning and is now off 0.39% to $81.91 approaching midday. The online home-goods retailer reported a quarterly loss that was wider than expected yesterday morning. Market Rebellion co-founder Jon Najarian cited alternative data from BattleFin and SimilarWeb that anticipated the poor results.