It took only a few sessions for bearish option traders to turn big gains in American Express (AXP).
On Jul. 19, Market Rebellion’s Unusual Activity Service found that 2,150 Weekly $175 puts, expiring Jul. 28, were bought for $2.98 above the existing open interest of 94 contracts with shares at $176.43.
Those puts have traded for as much as $11.38 this session, a 281.88% return, while the stock fell 7.27% 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.
AXP was last at $163.52, down 2.52% on the session.
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