$PYPL puts skyrocket 14-fold

Downside option positions in PayPal that expire this week posted stratospheric gains today.

On Oct. 1, Investitute’s tracking systems showed that 6,500 Weekly $86 puts expiring this Friday were bought for $0.61 to $0.67 with shares around $88.09. The volume was well above the open interest of 189 contracts, indicating that those puts were a new position.

Those puts traded for $9.12 today, more than 14 times their average purchase price. The stock dropped 12.66% in the same time frame, showing how options can quickly outperform moves in their underlying shares.

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.

PYPL fell 5.72% to $75.45 today. The electronic-payment service, which was trading at all-time highs only a few weeks ago, has fallen sharply since breaking below its 50-day moving average at the end of last month.