Option traders are riding for big profits on downside positions in Rayonier Advanced Materials Inc (RYAM) today.
On Aug. 4, Market Rebellion’s Unusual Activity Service found that 4,000 September $4 puts were bought for $0.30 to $0.39 above the existing open interest of 4 contracts with shares at $4.46.
Those puts were last marked for $0.90, a 130.77% return, while the stock fell 31.17% 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.
RYAM was last up 5.5% at $3.07.
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