$FL put buyers sneak in a win

Foot Locker bears turned significant profits on bearish positions opened late in the day only one session earlier.

Just yesterday, Investitute’s market scanners identified the purchase of 3,000 Weekly 59.50 puts expiring today, 22March, from $0.45 to $0.60 with shares at $59.87. This was clearly a new position, as open interest in the strike was only 138 contracts before the trade occurred.

Those puts sold for as much as $2.55 this afternoon, more than 4 times their purchase price less 24 hours before. The stock fell 4.83% 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.

FL ended today’s session down 4.79% to $56.91. The athletic-shoe retailer’s shares were weighed on by both the broader market as well as an earnings report from Nike (NKE) released the night before.