$KIRK bears browse for profits

Bearish Kirkland’s, Inc. (KRIK) option traders who opened downside positions on Tuesday are making gains today.

On Nov. 30, Market Rebellion’s Unusual Activity Service found that 2,000 December $22.50 puts were bought as part of a bearish spread for $2.25 to $2.30 above the existing open interest of just 97 contracts with shares at $21.97.

Those puts traded for as much as $8.80 today, over 3.5 times their purchase prices. The stock declined 37.92% in the same time frame, showing how quickly options can far outperform moves in their underlying shares 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.

KIRK ended down on the session by 8.46% at $14.17.