Bearish option traders quadrupled their money in Nike just days after opening their positions.
On Tuesday, Investitute’s proprietary programs flagged the purchase of 5,300 September $57.50 puts for $0.78 to $0.85 with shares at $58.64. This represented new positions, as volume was well above the strike’s open interest of 1,855 contracts.
Those puts traded up to $3.60 this morning, a gain of more than 340 percent in less than four sessions. The stock was down less than 7.6 percent at the same time, showing how quickly options can far outperform their underlying shares.
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.