Bearish option traders are posting big profits in Credit Suisse Group AG (CS) today.
On May 19, Market Rebellion’s Unusual Option Activity Service found that 7,480 September $7 puts were bought for $0.80 as part of a bearish roll with shares at $6.73. This was clearly fresh buying, as open interest in the contract was just 4,208 before the activity appeared.
Those puts have traded for as much as $1.62 so far this session, more than 2 times their purchase price. The stock fell 20.21% 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.
CS was last at $5.29, down 5.87% for the day.
Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!