Puts prices soar 9-fold in $MET

Bearish option traders made a killing in MetLife today as its shares continued to falter.

On March 20, Investitute’s proprietary programs found that 3,000 Weekly $44 puts expiring on March 29 were bought for $0.28 as part of a bearish roll with shares at $44.91. This was clearly a new position, as open interest in the strike was a mere 30 contracts before the activity appeared.

Those puts traded for as much as $2.53 today, 9 times their purchase price. The stock fell 7.64% in the same time frame, underscoring how options can far outperform 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.

MET was down 3.31% to $41.79 today. The insurance giant, which has declined along with the rest of the financial sector after this week’s Fed announcement, was downgraded Tuesday to “hold” from “buy” at Sandler O’Neill on uncertainties over the company’s new CEO.