$BEKE bears score at lows

Bearish option traders have racked up huge gains in KE Holdings Inc (BEKE).

On Jul. 8, Market Rebellion’s Unusual Option Activity programs detected the the purchase of 6,000 August $30 puts, expiring today, for $1.00  as part of a bearish roll with shares at $37.27. Volume was clearly above the previous open interest of 412 contracts, indicating that this was a new position.

And then on Jul. 23, another purchase was found, also as a roll, of 9,000 August $22.50 puts, expiring today, for $1.30 to $1.45 with shares at $27.47. Volume in this trade was clearly above the previous open interest of 17 contracts, indicating that this too was a new position.

Those puts respectively sold for as much as $14.01 and $6.43 today, over 6 times their purchase price. The stock fell by as much as 41.79% 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.

BEKE was down 5.26% to close at $16.11 this afternoon, after setting a new low of $15.82 earlier in the session.