$SPY bears triple their money

Bearish option traders racked up quick gains as the SPDR S&P 500 Fund dropped today.

Just Friday morning, Investitute’s tracking systems found that 5,000 Weekly $265 puts expiring on July 13 were purchased for $0.74 with shares at $275.51. This was clearly fresh buying, as open interest in the strike was only 1,062 contracts before the activity appeared.

Those puts were purchased for as much as $2.37 today, more than 3 times their purchase price. The stock fell 2.33% in the same time frame, underscoring how options can far outperform moves in their underlying shares. Investitute co-founder Jon Najarian discussed recent SPY puts on CNBC’s “Halftime Report” this afternoon.

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.

The SPDR S&P 500 Fund was down 1.36% today to close at $271 even. Trade war concerns have rattled the shares in recent weeks.