$NXPI bears triple their money

NXP Semiconductors dropped today, handing large gains to downside option positions.

On Jan. 30, Investitute’s proprietary programs flagged the purchase of 5,000 April $115 puts in one print for $2.95. The position was part of a bearish spread with shares at $120.33.

Those puts ended today’s session trading for $8.21, nearly 3 times their purchase price. The stock fell 11.1% in the same time period, underscoring how options can far outperform moves in 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.

NXPI was down 5.15% to $107.17 today. NXP Semiconductors and Qualcomm were forced to resubmit their merger application with China’s Commerce Ministry, which raised competitive concerns.