Bearish option traders are scoring fast gains in their downside positions on Dlocal Ltd (DLO) today.
Just two hours ago on Nov. 16, Market Rebellion’s Unusual Option Activity Service found that 2,000 January $15 puts were bought for $0.59 to $0.60 with shares at $20.63. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 185.
Those puts have traded up to $4.00 so far this session, over 6.5 times their purchase prices. The stock declined 36.31% 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.
DLO was last down by 42.74% in afternoon trade at $12.15.