$MEET bears turn quick gains

Bearish traders in The Meet Group posted quick gains as the shares dropped after earnings.

On Mar. 4, Investitute’s proprietary programs cited the purchase of 4,000 March 6 puts for $0.45 to $0.50 with shares at $5.90. Open interest in the strike before the trade occurred was a mere 373 contracts before the trade occurred, showing that this was a new position.

Those March 6 puts traded for $1.05 today, double their purchase price. The stock fell 16.27% in the same time frame, illustrating how quickly 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.

MEET traded down to an intraday low of $4.88 before pulling back higher, still closing off 7.74% at $5.48 this afternoon. The stock dropped after the social entertainment service reported earnings in-line with expectations.