Put buyers ride with profits in $DIDI

DiDi Global Inc (DIDI) fell today and bearish option trades are riding with profits.

On Jul. 12, Market Rebellion’s Unusual Activity programs detected the the purchase of 5,300 Weekly $9.50 puts, expiring next Friday, Jul. 30, for $0.55 to $0.62 with shares at $11.42. Volume was clearly above the previous open interest of 338 contracts, indicating that this was a new position.

Those puts sold for as much as $1.78 today, more than 3 times their purchase prices. The stock fell 30.04% in the same time frame, showing how quickly 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.

DIDI was last lower this session by 21.43% to $8.01. The Chinese vehicle for hire company has fallen sharply since its ADR listing.