$PINS bears double money

Bearish unusual option activity in Pinterest (PINS) over the past two weeks is paying off this session.

Market Rebellion’s Unusual Activity programs have been detecting bearish option activity in the name over the past couple of weeks:

–On Jul. 14, 3,700 August $72.50 puts were purchased for $5.08 to 5.58 above open interest of 1,363 contracts with shares at $73.23.
–On Jul. 26, 2,400 August $76 puts were purchased for $5.80 to $6.10 above open interest of 326 contracts with shares at $75.98.

Those puts have respectively traded for as much as $14.34 and $12.20 this session, well over double their purchase prices. The stock fell by as much as 23.45% in the same time frame, a huge move but nothing like that of its 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.

PINS was last lower by 18.64% to $58.44. The social networking service missed bottom-line estimates during its earnings report yesterday after the closing bell.