Bearish option traders have doubled their money in downside positions on the SPDR S&P Retail Fund (XRT) today.
On Apr. 11, Market Rebellion’s Unusual Option Activity Service found that 5,000 Weekly $63 puts, expiring this Friday, were bought for $0.60 as part of a bearish roll above the existing open interest of 525 contracts with shares at $63.48.
Those puts have traded up to $1.34 this session, a 123.33% return, while the ETF fell 2.32% 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 2.64% at $61.98 this afternoon.
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