Bearish option traders have tripled their money on downside positions in the SPDR S&P Retail Fund (XRT) today.
On Feb. 17, Market Rebellion’s Unusual Option Activity Service found that 4,000 March $72 puts, expiring this Friday, were bought for $3.32 as part of a bearish spread above the existing open interest of 2,049 contracts with shares at $70.46.
Those puts have traded up to $11.58 this session, over 3 times their purchase price. The ETF fell 14.55% at the same time, showing how quickly options can far outpace gains in their underlying shares.
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 XRT was last lower by 0.58% at $61.20 this afternoon.
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