$IYR put buyers score fast profits

Bearish option traders’ downside put positions are scoring today in the iShares US Real Estate ETF (IYR) as shares trade lower.

On Dec. 14Market Rebellion’s Unusual Option Activity Service found that 7,500 Weekly $88 puts, expiring Dec. 30, were bought for $0.99 as part of a bearish spread above the existing open interest of 4 contracts with shares at $89.52.

Those puts have traded up to $2.16 today, over 2 times their purchase price. The ETF declined 3.43% 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.

The IYR was last down 1.73% to $86.45 in morning trade.

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