Traders recently posted profits with upside bets in Snap, but today they made far more money with downside positions.
Just yesterday, Investitute’s tracking systems found that 6,500 Weekly $20 puts expiring tomorrow were purchased for $0.40 with shares at $23.01. The volume was well above the strike’s previous opening interest of 3,791 contracts, indicating that this was fresh buying.
This morning those puts for $2.40, a gain of 500 percent less than one full session later. The stock fell about 23 percent at the same time, showing how far options can outperform their umderlying shares.
Long puts lock in the price where a stock can be sold no matter how far it might drop, rising 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.
SNAP closed today down 21.45 percent to $18.05. Traders collected significant profits with bullish positions in the name only two weeks ago, illustrating how options can be used in both directions with less risk than buying or shorting the stock.
For more information on Unusual Option Activity, visit this page.