Option traders raked in fast profits in put positions on CVS Health Corp (CVS) today.
On Aug. 17, Market Rebellion’s Unusual Option Activity Service found that 15,000 August $103 puts, expiring this Friday, were bought for $0.13 to $0.19 with shares at $105.53. This was clearly fresh buying, as open interest in the contract was just 1,411 before the activity appeared.
Those puts have traded up to $0.67 this session, over 3 times their purchase prices. The stock fell 2.63% in the same time frame, showing how quickly options can far outperform moves in their underlying shares 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.
CVS is currently lower by 1.32% at $103.53.
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