Put buyers stock up on fast profits in $ACI

Bearish option traders are stocking up on fast profits in Albertsons Companies Inc (ACI) today.

On Dec. 7, Market Rebellion’s Unusual Activity Service found that 2,520 December $36 puts were bought for $0.85 as part of a bearish spread above the existing open interest of just 265 contracts with shares at $36.80.

Those puts were last marked for $5.20, over 6 times their purchase price. The stock declined 17.12% 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.

ACI was last lower by 4.19% to $30.50 in morning trade.