$CZR bears score a jackpot

Option traders have made exponential gains on their money in downside bets on Caesars Entertainment (CZR).

On Apr. 14, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 3,400 May $50 puts, expiring tomorrow, for $0.52 to $0.54 with shares at $70.42. Volume was well above the strike’s previous open interest of 2,317 contracts, showing that this was fresh interest.

Those puts have traded up to $3.50 this morning, nearly 6 times their purchase prices. The stock declined 33.71% 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.

CZR was last down by 0.27% at $47.82 in morning trade.