Casey’s General Stores dropped sharply on poor quarterly results this morning, resulting in fast money for bearish traders.
Just yesterday, Investitute’s market scanners showed that 2,000 June $115 puts were purchased for $2.60 with shares at $116.35. This was clearly a new position, as open interest in the strike was only 305 contracts before it occurred.
Those puts traded as high as $9 this afternoon, a gain of more than 240 percent in 24 hours. The stock was down less than 9 percent at the same time, underscoring how quickly options can far outperform 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.
CASY fell 8.45 percent to $106.66 today. The convenience-store chain missed earnings and revenue estimates before the market opened.