$GRUB puts soar 11-fold in a day

Option traders are racking up enormous profits today on downside positions opened in GrubHub (GRUB) only one session earlier.

Just yesterday, Market Rebellion’s proprietary programs found that 2,000 Weekly $55 puts expiring this Friday were bought in one print for $1.95 with shares at $59.22. Open interest in the strike was only 424 contracts before the trade occurred, showing that this was a new position.

Those puts have traded for as much as $21.90 today, more than 11 times their purchase price. The stock plummeted 44.11% at the same time, a huge move but still 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.

GRUB is down 42.83% to $33.38 in midday trading. The food-delivery service missed earnings estimates and lowered its outlook after the market closed yesterday.