Put buyers win again in $TLRD

Bearish option trades in Tailored Brands paid off for the second session in a row today.

On March 11, Our proprietary programs flagged the purchase of 10,000 March $13 puts for $1.60 to $1.80 as part of a bearish roll with shares at $12.14. This was clearly a new position, as open interest in the strike was only 546 contracts before the activity appeared.

Those puts traded for $4.26 today, 2.5 times their average purchase price. The stock plunged 27.84% in the same time frame, a large move but far below that of the puts, illustrating how options can far outperform their underlying shares on a relative basis.

It is the second winning trade in the name posted on Unusual Option Activity in as many days.

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.

TLRD fell to $8.73 this morning but ended the day up 0.69% to $8.81. The apparel retailer missed quarterly expectations and issued a disappointing outlook after the market closed Wednesday.