$NKLA bears get behind the wheel

Nikola (NKLA) bears are driving big gains on downside option positions today, opened just yesterday.

On Nov. 24, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,500 Weekly $30 puts, expiring on Dec. 4, for $2.56 to $2.57 with shares at $35.28. This was clearly fresh buying, as open interest in the strike was only 268 contracts before the activity appeared.

Those puts traded for as much as $5.00 this morning, nearly 2 times their purchase prices. The stock fell 19.1% in the same time frame, a huge move but nothing like that of its options.

This wining downside trade follows a win for the bulls just yesterday in the name, illustrating how option traders can find opportunity in any tape.

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.

NKLA was last lower on the day by 9.86%, trading at $31.10. The battery-electric and hydrogen fuel-cell electric vehicle’s initial lockup expiry occurs on Dec. 1.