$SFIX bears double money

Option traders turned big profits on downside positions in Stitch Fix (SFIX) today after quarterly results.

On July 12, Market Rebellion’s proprietary programs flagged the purchase of 5,000 December $35 puts for $8.10 to $8.60 with shares at $29.79. This was clearly fresh buying, as open interest in the strike was a mere 27 contracts before that session began.

Those puts are marked at $17.80 this morning, more than twice their purchase prices. The stock plunged 41.66% in the same time period, a huge move but still far below 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.

SFIX is down 13.51% to $17.38 in early trade today. The online-clothing retailer topped earnings estimates but issued guidance that came in lower than expected after the market closed yesterday.