Bearish option traders are hitting big profits in downside positions on the SPDR S&P Regional Banking ETF (KRE).
On Jan. 23, Market Rebellion’s Unusual Option Activity Service found that 30,000 March $58 puts were bought for $0.97 to $0.98 with shares at $61.05.
Those puts have traded up to $15.70 so far this session, over 16 times their purchase prices. The stock declined 30.71% 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.
KRE was last down 11.24% at $44.99.
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