$ILF bears quintuple their money

Downside option traders racked up big profits as the iShares Latin America 40 Fund fell today.

On May 16, Investitute’s proprietary programs flagged the purchase of 7,000 June $34 puts in one print for $0.50 with shares at $35.18. This was clearly a new position, as open interest in the strike was a mere 15 contracts before that session began.

Those puts traded for $2.50 today, 5 times their purchase price. The stock dropped 10.4% in the same time frame, underscoring how options can far outperform their underlying shares.

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.

ILF was down 3.96% to $31.28 today. The exchange-traded fund, whose weightings include 57.1% Brazilian companies, fell along with shares of large companies in that nation as a truckers’ strike continued to blockade highways.