Bears triple money in $GPS

Downside option traders posted big profits as Gap shares dropped today.

On April 12, Investitute’s proprietary programs flagged the purchase of 3,000 May $25 puts bought for $0.71 with shares at $25.54. This was clearly fresh buying, as open interest in the strike was only 132 contracts before that session began.

Those puts were marked at $2.36 just before today’s closing bell, more than 3 times their purchase price. The stock fell 10.96% 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.

GPS was down 6.65% to $22.74 today. The clothing retailer fell along with other companies that depending on manufacturing in China as trade disputes escalate.