$SPY option bears score

Bearish option traders are collecting big profits in the SPDR S&P 500 Fund (SPY) today.

On Jul. 8Market Rebellion’s Unusual Option Activity Service found that 20,000 Daily $378 puts, expiring today, were bought for $1.06 as part of a bearish spread with shares at $387.92. This was clearly fresh buying, as open interest in the contract was just 5,698 before the activity appeared.

Those puts have traded up to $4.22 this session, nearly 4 times their purchase prices. The stock fell 3.41% 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 is currently lower by 0.092% at $380.48.

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