Option traders are riding for fast profits on downside positions in Peloton (PTON) today.
On Aug. 7, Market Rebellion’s Unusual Activity Service found that 2,600 August $8.50 puts were bought for $0.46 to $0.57 above the existing open interest of 578 contracts with shares at $8.57.
Those puts have traded for as much as $1.50 this session, a 163.16% return, while the stock fell 18.44% 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.
PTON was last up 1.74% at $7.02.
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