$KRE put prices spike 8-fold

Bearish positions opened only two weeks ago are returning big gains in the SPDR S&P Regional Banking Fund (KRE) today.

On Apr, 30, our Unusual Activity service detected the purchase of 10,000 May $34 puts in two prints as part of a bearish spread for $0.39 and $0.40 with shares at $38.50. This was clearly a new position, as open interest in the strike was only 204 contracts before that session began.

Those puts traded to a high of $3.44 today, more than 8 times their purchase prices. The stock fell 19.66% 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 ended today up 3.18% to $32.40 after making a new low for the month-to-date earlier in the session of $29.72. The exchange-traded fund, which tracks a basket of regional banks, fell sharply over recent sessions as the speed and breadth of the reopening of the U.S. economy remains debated.