$CGC option bears roll up gains

Bearish option traders are rolling up gains in Canopy Growth (CGC) today as shares hit new multiyear lows.

On Apr. 29, Market Rebellion’s Unusual Option Activity Service found that 5,000 July $6 puts were bought as part of a bearish spread for $1.33 to $1.35 with shares at $5.76. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 577.

Those puts have traded up to $3.65 this session, over 2.5 times their purchase price. The stock declined 58.51% 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.

CGC was last trading at $2.35, down by 10.31% on the day.