$KSS option bears quadruple money

Option bears are quadrupling their money today in bearish positions on Kohl’s (KSS).

On Mar. 28, Market Rebellion’s Unusual Activity Service found that 2,000 June $60 puts were bought for $5.44 to $5.77 as part of a bearish spread with shares at $60.63. This was clearly fresh buying, as open interest in the strike was just 180 contracts before the activity appeared.

Those puts have traded for as much as $25.24 today, over 3 times their purchase prices. The stock fell 41.53% in the same time period, underscoring how 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.

KSS was last lower by 6.17% at $35.88 this afternoon.