$IYR put buyers score profits

Bearish option traders’ downside put positions are scoring today in the iShares US Real Estate ETF (IYR) as shares trade lower.

On Feb. 9, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 20,000 Weekly $105 puts, expiring today, for $0.27 as part of a bearish spread with shares at $106.78. Volume was well above the strike’s previous open interest of 4,428 contracts, showing that this was fresh interest.

Those puts have traded up to $0.80 today, almost 3 times their purchase price. The stock declined 2.19% 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.

IYR was last up 0.15% to $104.27 in midday trade.