$KRE put prices soar 8-fold

Bearish positions opened less than one month ago are returning big gains in the SPDR S&P Regional Banking Fund (KRE) today.

On Feb, 18, our Unusual Activity service detected the purchase of 61,292 March $54 puts as part of a bearish spread and roll, for $0.71 with shares at $55.66. This was clearly a new position, as open interest in the strike was only 6,970 contracts before that session began.

Those puts closed the session marked for $5.85 today, more than 8 times their purchase price. The stock has fallen 17.54% in the same time period, a large move in just over 24 hours, but nowhere near that of its options.

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 is ended today down 5.24% to $45.90. The exchange-traded fund, which tracks a basket of regional banks, has fallen along with the broader market after the Federal Reserve cut interest rates on Tuesday morning.