$NYCB option bears bank fast profits

Bearish option traders are banking profits in downside positions on New York Community Bancorp, Inc. (NYCB).

On Feb. 5, Market Rebellion’s Unusual Option Activity Service found that 19,000 July $4 puts were bought for $0.50 to $0.60 above the existing open interest of 992 contracts with shares at $5.45.

Those puts have traded up to $1.51 this session, a 151.67% return, while the stock declined 24.59% in the same time period, a large move but nowhere near that of its options 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.

NYCB closed down 22.22% at $4.20.