Chip bears flip fast profits in $SWKS

Skyworks Solutions (SWKS) has handed bearish option traders fast profits today.

Earlier this afternoon, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 2,000 October $149 puts for $0.36 to $0.57 with shares at $156.40. Volume was clearly above the strike’s previous open interest of 40 contracts, indicating that this was fresh buying.

Those puts have traded for up $1.12 since then, more than double their purchase prices. The stock had fallen down 0.84% in the same time period, 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.

SWKS was last down 2.2% at $153.63 today. The chip maker has pulled back from new all-time highs made yesterday.