Option traders have scored on downside positions opened in PayPal (PYPL) just two sessions ago.
On Aug. 1, Market Rebellion’s Unusual Activity Service found that 4,900 Weekly $72 puts, expiring on Aug. 4, were bought for $1.57 to $1.74 as part of a bearish roll above the existing open interest of 1,375 contracts with shares at $75.09.
Those puts have traded for as much as $7.85 this session, a 351.15% return, while the stock fell 14.56% 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.
PYPL was down 12.32% to close at $64.18 today.