$DVA bears turn quick gains

Option traders have already more than doubled their money on downside positions opened in DaVita (DVA) early this week.

On Sept. 16, Market Rebellion’s proprietary programs flagged the purchase of 4,000 October $60 puts for $1.20 with shares at $62.85. This was clearly a new position, as open interest in the strike was only 453 contracts before that session began.

Those puts traded for as much as $2.75 today, more than twice their purchase price. The stock fell 5.68% in the same time frame, showing how quickly 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.

DVA is down 2.28% to $59.91 in early afternoon trading. Shares fell after noted short-seller Jim Chanos disclosed a bearish position in the kidney-dialysis company this morning.