Shares of Tesla (TSLA) are falling today, delivering big gains to downside option positions.
On Nov. 16, Market Rebellion’s Unusual Option Activity Service found that 3,500 Weekly $155 puts, expiring on Dec. 30, were bought for $4.60 to $4.80 above the existing open interest of 329 contracts with shares at $192.07.
Those puts traded up to $12.20 today, over 2.5 times their purchase prices. The stock declined 24.06% in the same time period, a large move but nowhere near that of its options 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.
TSLA ended the session down 0.24% to $149.87.
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