$CMPS put prices track north

Bearish option traders are cashing in big profits on COMPASS Pathways PLC (CMPS) puts today.

On Nov. 8, Market Rebellion’s Unusual Activity programs detected the the purchase 16,433 November $45 puts as part of a bearish spread for $9.80 with shares at $47.41. The volume was well above the contract’s previous open interest of 190 which indicated that this was a new position.

Those puts traded for as much as $14.90 today, over 1.5 times their purchase price. The stock fell 35.48% in the same time frame, underscoring how options can far outperform moves in their underlying shares.

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.

CMPS ended the day down by 16.40% at $36.00.