Bearish option traders are collecting big profits in the SPDR S&P 500 Fund (SPY) today.
On Dec. 15, Market Rebellion’s Unusual Option Activity Service found that 16,500 Daily $393 puts, expiring today, were bought for $5.30 to $5.92 with shares at $390.80. This was clearly fresh buying, as open interest in the contract was just 2,232 before the activity appeared.
Those puts traded up to $15.26 this session, more than 2.5 times their purchase prices. The stock fell 3.27% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.
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.
SPY ended the session higher by 0.14% at $380.54.
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