$RLGY put prices soar 5-fold

A huge bearish position opened months ago in Realogy (RLGY) is paying off big time today.

On March 11, Investitute’s proprietary programs flagged the purchase of 11,944 September $10 puts in one print for $0.80 as part of a bearish roll with shares at $12.37. This was clearly a new position, as open interest in the strike was a mere 40 contracts before that session began.

Those puts traded for as much as $4.50 today, more than 5.5 times their purchase price. The stock dropped 55% in the same time period, a huge move but still nowhere near that of its options 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.

RLGYis down 2.38% to $5.73 this afternoon. Barclays cut its price target on the real-estate and relocation service to $5 from $9 this morning after the company filed a lawsuit charging “unfair bueinss practices and illegal schemes” against Compass.