$DKNG put prices triple

Bearish option traders are scoring big gains on downside wagers placed in DraftKings (DKNG) before its earnings report.

On Feb. 14, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 5,000 February $23 puts, expiring today, for $1.30 to $1.59 with shares at $23.59. Volume was well above the strike’s previous open interest of 2,316 contracts, showing that this was fresh interest.

Those puts have traded up to $5.55 today, more than 3 times their purchase price. The stock declined 25.77% 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.

DKNG was last lower on the session by 18.83% to $17.90.