$JMIA option bears bag a parcel of profits

$JMIA option bears bag a parcel of profits

by

Jumia (JMIA) is trading sharply lower today, and downside option positions opened yesterday are seeing large profits.

Yesterday afternoon on Aug. 14Market Rebellion’s Unusual Activity Service found that 3,000 August $3.50 puts were bought for $0.12 above the existing open interest of 411 contracts with shares at $3.75.

Those puts have traded for as much as $0.41 this session, a 241.67% return, while the stock fell 16.8% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

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.

JMIA was last down 17.07% at $3.08.

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