Option traders are posting big profits today on bearish positions opened in Pfizer (PFE).
On May 23, Market Rebellion’s Unusual Option Activity Service found that 48,000 June $40 puts were bought for $0.89 to $1.08 above the existing open interest of 11,369 contracts with shares at $40.11.
Those puts traded up to $2.39 this session, a 121.3% return, while the stock declined 5.76% in the same time period, a large move but nowhere near that of its options on a relative basis.
This return comes after bulls made big profits on calls during PFE’s upside run earlier in the week.
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.
PFE was last down 1.35% at $38.10.
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