Bearish option traders are cleaning up in Colgate-Palmolive (CL) today.
On Jan. 18, Market Rebellion’s Unusual Option Activity Service found that 4,600 January $77.50 puts, expiring today, were bought for $0.85 to $1.35 above the existing open interest of 1,946 contracts with shares at $77.35.
Those puts traded up to $3.48 today, over 2.5 times their purchase prices. The stock declined 4.02% 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.
CL was up 0.95% to $75.44 at the close.
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