Puts score again as $JWN falls

Puts score for option traders as they rack up large profits on downside positions in Nordstrom (JWN) today for the second time this week.

On May 14, Investitute’s tracking systems found that 3,500 Weekly $38 puts expiring this Friday were bought for $2.20 as part of a bearish spread with shares at $37.42. This was clearly a new position, as open interest in the strike was only 835 contracts before the activity appeared.

Those puts traded for as much as $4.73 today, more than twice their purchase price. The stock fell 11.1% in the same time frame, showing how options can far outperform moves in their underlying shares on a relative basis.

It is the second winning put trade in the name posted on Investitute in the last three sessions.

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.

JWN was down 0.92% to $33.50 today. The upscale retailer missed quarterly estimates and lowered its full-year outlook after the market closed on May 21.