Coinbase (COIN) is falling sharply today, rewarding downside put positions opened only yesterday.
On Nov. 7, Market Rebellion’s Unusual Option Activity Service found that 13,100 November $50 puts were bought for $0.93 to $1.08 with shares at $68.08. Volume was well above the strike’s previous open interest of 4,177 contracts, showing that this was fresh interest.
Those puts have traded up to $5.30 this session, about 5 times their purchase prices. The stock declined 26.22% 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.
COIN was last down by 11.57% at $50.38 in afternoon trade.
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