Bearish option traders are collecting profits in downside positions on the iShares Hong Kong ETF (EWH) today.
On Sep. 16, Market Rebellion’s Unusual Activity Service found that 10,000 December $18 puts were bought for $0.37 to $0.40 with shares at $19.90. This was clearly fresh buying, as open interest in the strike was just 139 contracts before the activity appeared.
Those puts have traded for as $1.90 so far today, more than 4.5 times times their purchase price. The stock fell 17.09% in the same time frame, a huge move but still 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.
EWH is currently trading lower on the session by 5.94% at $16.62.
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