Bears score quick win in $MU

It took just two sessions for option traders to nearly triple their money on downside positions in Micron (MU).

On Sept. 26, Market Rebellion’s activity scanners identified the purchase of 3,500 October $44 puts in one print for $0.81 with shares at $48.84. This was clearly a new position, as volume was well above the strike’s previous open interest of 2,960 contracts.

Those puts traded for as much as $2.27 this morning, almost 3 times their purchase price. The stock fell 12.51% in the same time frame, showing 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.

MU is down 0.79% to $42.88 this morning. The memory-chip maker dropped after reporting quarterly results last week and fell under even more pressure when Chinese equities pulled back.