$SPY option bears score

Bearish option traders are collecting big profits in the SPDR S&P 500 Fund (SPY) today.

On Dec. 18, Market Rebellion’s Unusual Option Activity Service found that 30,000 January $598 puts were bought for $5.18 to $5.22 with shares at $605.38. This was clearly fresh buying, as open interest in the contract was just 3,090 before the activity appeared.

Those puts traded up to $19.85 this session, a 280.27% return, while the stock fell 3.92% in the same time frame, showing how quickly options can far outperform moves in their underlying shares 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.

The SPY was last lower by 1.5% at $592.88.