Option traders scored big profits on downside positions in United Parcel Service, Inc. (UPS) today.
On Aug. 15, Market Rebellion’s Unusual Activity Service found that 5,000 September $170 puts were bought for $2.50 above the existing open interest of 2,498 contracts with shares at $173.77.
Those puts have traded for as much as $8.30 this session, a 232% return, while the stock fell 6.94% 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.
UPS was last down 1.07% at $162.24.
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