Put buyers turn quick gains in $TIF

Bearish option traders more than doubled their money today as Tiffany fell sharply on weak quarterly sales.

On Nov. 15, Investitue’s market scanners showed that 3,000 Weekly $102 puts expiring this Friday were purchased for $4 as part of a bearish spread with shares at $104.41. This was clearly a new position, as open interest in the strike was a mere 5 contracts before that session began.

Those puts traded for $10 this morning, 2.5 times their purchase price. The stock dropped 10.26% in the same time frame, illustrating 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.

TIF plunged 11.82% to $92.54 today. The luxury jeweler missed revenue estimates before the market opened.