Put prices move higher in $DHI

Bearish option traders are building big gains in D.R. Horton (DHI).

On Jan. 5, Market Rebellion’s Unusual Activity programs detected the the purchase of 2,500 February $100 puts for $2.51 to $2.80 with shares at $105.79. Volume was clearly above the previous open interest of 481 contracts, indicating that this was a new position.

Those puts have traded for as much as $6.60 so far this session, over double their purchase price. The stock fell 8.69% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options.

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.

DHI was last lower by 5.03% at $96.38 in midday trade.