Bearish option traders have turned big profits in the SPDR Industrial Fund (XLI).
On Sep. 7, Market Rebellion’s Unusual Activity Service found that 11,840 October $104 puts were bought for $1.36 as part of a bearish spread above the existing open interest of 1,270 contracts with shares at $106.05.
Those puts have traded for as much as $3.26 this session, a 139.71% return, while the stock fell 4.63% 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.
The XLI was last down on the session by 1.09% at $101.18.
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