$SHOP puts deliver profits

$SHOP puts deliver profits

by

Option traders are scoring profits today on downside positions opened in Shopify Inc (SHOP) last month.

On Oct. 18Market Rebellion’s Unusual Option Activity Service found that 2,300 Weekly $50 puts, expiring Nov. 3, were bought for $1.12 to $1.23 with shares at $55.47. This was clearly fresh buying, as open interest in the contract was just 577 before the activity appeared.

Those puts have traded for as much as $3.90 this session, an 217.07% return, while the stock fell 14.66% 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.

SHOP is down 1.59% to $69.83 in midday trade.

Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!

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