Bears turn quick profits in $SYF

It has taken less than a week for option traders to run up large gains on downside positions in Synchrony Financial.

On Sept. 24, Investitute’s proprietary programs found that 2,700 Weekly $32.50 puts expiring on Oct. 5 were purchased for $0.25 with shares at $33.42. Open interest in the strike was a mere 22 contracts before the activity appeared, showing that this was fresh buying.

Those puts ended today’s session marked at $1.45, nearly 6 times their purchase price. The stock dropped 7% at the same time, underscoring how options can far outperform moves in their underlying shares.

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.

SYF was down 1.55% to $31.08 today. The financial-services firm fell in the last week along with the rest of the sector leading up to the Fed’s rate announcement.