$NET bears make fast gains

Bearish option traders are making fast gains on their downside positions in Cloudflare (NET) today.

Wednesday morning on Sep. 2, Market Rebellion’s Unusual Activity scanners identified the purchase of 2,100 October $37 puts for $2.80 with shares at $38.82. This was clearly a new position, as volume was well above the strike’s previous open interest of 106 contracts.

Those puts traded for as much as $5.80 today, more than 2 times their purchase prices. The stock declined 12.93% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

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.

NET ended lower this session by 4.15% at $34.77. The web infrastructure and security company declined along with the broader market over the past two sessions.