$IYR put prices spike overnight

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

On Apr. 9, Market Rebellion’s Unusual Option Activity Service found that 8,695 Weekly $87 puts, expiring Apr. 12, were bought for $0.23 with shares at $88.81. This was clearly fresh buying, as open interest in the contract was just 892 before the activity appeared.

Those puts have traded for as much as $1.71 this session, a 643.48% return, while the stock declined 3.73% at the same time, underscoring how quickly 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.

The IYR closed the session down 4.06% to $85.61.

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