Bearish option traders are collecting quick profits in Fastenal Company (FAST) today.
On Jul. 12, Market Rebellion’s Unusual Option Activity Service found that 2,500 July $50 puts were bought for $0.86 as part of a bearish spread with shares at $50.98. This was clearly fresh buying, as open interest in the contract was just 973 before the activity appeared.
Those puts have traded up to $3.48 this session, over 4 times their purchase price. The stock fell 8.57% in the same time frame, showing how quickly options can far outperform moves in their underlying shares 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.
FAST is currently lower by 5.72% at $47.13.
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