$KRE option bears bank fast profits

Bearish option traders are banking profits in downside positions on the SPDR S&P Regional Banking ETF (KRE).

On Jan. 31, Market Rebellion’s Unusual Option Activity Service found that 4,500 Weekly $50 puts, expiring on Feb. 9, were bought for $0.73 to $0.76 above the existing open interest of 287 contracts with shares at $50.85.

Those puts have traded up to $3.55 this session, a 367.11% return, while the stock declined 8.34% 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.

KRE closed down 3.12% at $48.15.