$BITO put prices rise 5-fold

On Jun. 9, Market Rebellion’s Unusual Option Activity Service found that 7,500 Weekly $15 puts, expiring tomorrow, were bought for $0.42 to $0.43 with shares at $18.66. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 113.

Those puts have traded up to $2.22 this session, over 5 times their purchase price. The stock declined 31.4% in the same time period, a large move but nowhere near that of its options 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.

BITO was last up by 3.03% at $12.94 in midday trade.