Bears win as $SIG loses luster

Option traders have more than doubled their money on downside positions in Signet Jewelers.

On April 8, Investitute’s proprietary programs flagged the purchase of 3,000 May $26 puts for $1.50 to $1.55 as part of a bearish spread with shares at $26.52. Open interest in the strike was a mere 80 contracts before the trade occurred, showing that this was a new position.

Those puts traded for as much as $3.90 today, more than 2.5 times their average purchase price. The stock fell 14,63% in the same time frame,

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.

SIG fell to $22.59 this morning, a nickel above its 52-week low, before closing higher by 0.53% at $22.71. The jeweler has fallen sharply since its quarterly results two weeks ago.