$CS put buyers withdraw large gains

Bearish option traders posted big profits in Credit Suisse (CS) today.

On Mar. 26, Market Rebellion’s Unusual Activity Service identified the purchase of 8,600 April $13 puts for $0.35 to $0.50 with shares at $13.20. This was clearly fresh buying, as open interest in the strike was only 1,829 contracts before the activity appeared.

Those puts have traded for as much as $2.15 so far this session, at least 4 times their purchase prices. The stock fell 17.27% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

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.

CS was last down 4% to $10.93 today. The Zurich-based firm announced yesterday that hedge fund default could bring a ‘highly significant’ Q1 loss.