Bears triple money in $KSS

It took just two sessions for option traders to post exponential gains on downside positions in Kohl’s (KSS).

On Jan. 8, Market Rebellion’s Unusual Activity Service found that 3,600 Weekly $47.50 puts expiring this afternoon were bought for $0.45 to $0.60 with shares at $49.42. This was clearly fresh buying, as open interest in the strike was only 805 contracts before the activity appeared.

Those puts sold foras much as $1.40 today, 3 times their initial purchase price. The stock fell 6.64% 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.

KSS opened at $45.65, a penny off its session low, but is up 1.32% to $46.76 this afternoon. Analysts downgraded the retailer on Jan. 8, cited weak holiday sales.