$EXPR bears triple money in a day

Express plunged on disappointing guidance this morning, turning quick profits on downside option positions opened only one session earlier.

Just yesterday, Investitute’s proprietary programs flagged the purchase of 2,200 December $7 puts for $0.40 to $0.55 with shares at $7.31. Open interest in the strike was only 164 contracts before the trades occurred, indicating that this was fresh buying.

Those puts traded for as much as $1.30 this morning, more than 3 times their purchase price. The stock plunged 21.48% at the same time, 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.

EXPR hit a 52-week low of $5.68 this morning but closed at $6.80, still down 5.03% on the session. The apparel retailer topped quarterly expectations but provided an outlook that was well short of expectations before the market opened this morning.