$SKLZ put buyers score big

Option traders are scoring big profits on downside positions in Skillz (SKLZ) today.

On Jul. 1, Market Rebellion’s Unusual Activity Service detected the purchase of 20,000 August $15 puts for $0.75 to $0.85 with shares at $20.58. Open interest in the strike was just 3,604 contracts before that session began, showing that this was fresh buying.

Those puts traded for as much as $4.64 today, at least 5 times their purchase prices.  The stock fell 49.47% 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.

SKLZ was down 0.84% to close at $10.58 today, setting a new 52-Week low of $10.34 earlier in the session. The online multiplayer platform’s shares have been trading lower since missing bottom line earnings estimates on Aug. 3.