$QQQ put prices double in days

Option traders posted big gains on downside positions opened just over one week ago in the tech-heavy PowerShares QQQ Fund (QQQ) today.

On Aug. 27, Market Rebellion’s Unusual Activity scanners identified the purchase of 15,480 Weekly $285 puts, expiring today, Sep. 4, for $2.84 as part of a bearish spread with shares at $291.46. This was clearly a new position, as volume was well above the strike’s previous open interest of 4,822 contracts.

Those puts traded for as much as $13.10 today, more than 4.5 times their purchase price. The stock declined 6.74% in the same time frame, underscoring how quickly options can far outperform 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.

QQQ declined sharply today to a low as $271.80 but ended the day at $283.58, down 1.33% on the session. The exchange-traded fund reflects the Nasdaq 100 Index, which has seen its components retrace some recent gains this week.