$PACW put buyers bank profits

Bearish option traders are banking profits in downside positions on PacWest Bancorp (PACW).

On Apr. 25, Market Rebellion’s Unusual Option Activity Service found that 12,100 Weekly $9.50 puts, expiring on May 5, were bought for $0.70 to $1.10 above the existing open interest of 117 contracts with shares at $10.38.

Those puts have traded up to $8.30 this session, a 654.55% return, while the stock declined 66.09% 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.

PACW was last down 47.8% at $3.35.