Bears take a bite out of $CHWY

Patient bears tripled their money in downside option positions on Chewy (CHWY) today.

On Sep. 3, Market Rebellion’s Unusual Activity Service found that 4,000 December $75 puts were bought for $7.05 as part of a bearish roll against no existing open interest with shares at $77.05.

Those puts have traded up to $22.50 this session, over 3 times their purchase price. The stock declined 31.8% in the same time frame, showing how quickly 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.

CHWY was last up on the day by 6.80% to $55.26, bouncing from its 52-Week low of $50.05 set on Friday.