$EWH bears quadruple money

Bearish option traders are collecting profits in downside positions on the iShares Hong Kong ETF (EWH) today.

On Sep. 16Market 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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