Option traders have scored fast gains in downside bets on SunPower Corporation (SPWR).
On Oct. 23, Market Rebellion’s Unusual Option Activity Service found that 3,400 Weekly $5 puts, expiring Oct. 27, were bought for $0.17 to $0.20 with shares at $5.14. This was clearly fresh buying, as open interest in the contract was just 314 before the activity appeared.
Those puts have traded for as much as $1.12 this session, a 460% return, while the stock fell 23.93% 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.
SPWR settled the session at $4.06, down 18.15% for the day.
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