$DE put prices soar fourfold

Option traders collected exponential profits on bearish positions in Deere today.

On April 9, Investitute’s proprietary programs flagged the purchase of 4,000 May $160 puts bought for $4.85 to $5.35 with shares at $160.46. This was clearly fresh buying, as open interest in the strike was only 248 contracts before the trades occurred.

Those puts traded for as much as $23.65 this afternoon, more than 4 timtes their purchase prices. The stock dropped 15.06% in the same time period, underscoring how options can far outperform moves in their underlying shares 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.

DE fell 7.65% to $134.82 today. The agriculture-equipment manufacturer’s earnings came in well below estimates before the market opened this morning.