$PLAY put buyers win big gains

Bearish option traders are winning big gains in Dave & Buster’s (PLAY) today.

On May 5, Market Rebellion’s Unusual Activity Service found that 8,000 June $40 puts were bought for $2.11 to $2.18 with shares at $45.54. This was clearly fresh buying, as open interest in the strike was just 101 contracts before the activity appeared.

Those puts have traded for as much as $7.20 today, over 3 times their purchase prices. The stock fell 26.24% in the same time period, underscoring how options can far outperform moves in their underlying shares 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.

PLAY is down 0.37% to $34.73 in late session trading.