Bearish option traders are benefiting significantly from Equifax’s losses.
On Wednesday, Investitute’s proprietary programs cited the purchase of 9,900 October $100 puts for $2.20 to $5.10 with shares at $102.95. This was clearly fresh buying, as open interest in the strike was only 1,284 contracts before the activity appeared.
Those puts traded up to $11.72, more than five times their original price. The stock fell 11.5 percent at the same time, showing how quickly options can outpace moves 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.
EFX fell 3.81 percent to $92.98 today. The stock has lost more than a third of its value since the credit-reporting company disclosed a massive security breach on Sept. 8.