Option bears double money in $DHI

Bearish option traders are building big gains in D.R. Horton (DHI).

On Feb. 10, Market Rebellion’s Unusual Activity programs detected the the purchase of 2,000 March $80 puts for $1.91 to $1.92 as part of a bearish spread with shares at $86.42. Volume was clearly above the previous open interest of 527 contracts, indicating that this was a new position.

Those puts traded for as much as $4.60 this session, over double their purchase prices. The stock fell 9.58% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

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.

DHI closed the session lower by 2.79% at $78.15.