$CS put prices rise 5-fold

$CS put prices rise 5-fold

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Bearish option traders are posting big profits in Credit Suisse Group AG (CS) today.

On Sep. 26Market Rebellion’s Unusual Option Activity Service found that 5,000 March $3 puts were bought for $0.25 with shares at $4.16. This was clearly fresh buying, as open interest in the contract was just 343 before the activity appeared.

Those puts traded for as much as $1.32 this session, more than 5 times their purchase price. The stock fell 56.49% 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 closed at $2.16, down 13.94% for the day.

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