$FAST option bears make quick profits

Bearish option traders are collecting quick profits in Fastenal Company (FAST) today.

On Jul. 12, Market Rebellion’s Unusual Option Activity Service found that 2,500 July $50 puts were bought for $0.86 as part of a bearish spread with shares at $50.98. This was clearly fresh buying, as open interest in the contract was just 973 before the activity appeared.

Those puts have traded up to $3.48 this session, over 4 times their purchase price. The stock fell 8.57% 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.

FAST is currently lower by 5.72% at $47.13.