$KRE option bears bank profits

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

On Apr. 28, Market Rebellion’s Unusual Option Activity Service found that 22,594 Weekly $39 puts, expiring on May 5, were bought for $0.15 above the existing open interest of 6,387 contracts with shares at $43.00.

Those puts have traded up to $1.67 this session, a 1,013.33% return, while the stock declined 11.14% 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 6.27% at $38.86.