$NKLA option bears turn fast profits

Nikola (NKLA) bears are turning big gains on downside option positions today.

On Sep. 14Market Rebellion’s Unusual Option Activity Service found that 35,000 Weekly $5 puts, expiring this Friday, were bought for $0.18 as part of a complex bearish spread and roll with shares at $5.31. This was clearly fresh buying, as open interest in the contract was just 619 before the activity appeared.

Those puts traded for as much as $0.53 this session, nearly 3 times their purchase price. The stock fell 14.69% 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.

NKLA ended the session down by 0.44% at $4.56.

Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!