$SRLN puts yield big gains for bears

Option traders have turned big profits on downside positions in the SPDR Blackstone Senior Loan ETF (SRLN).

On Apr. 14, Market Rebellion’s Unusual Option Activity Service found that 10,000 August $43 puts were bought for $0.85 as part of a bearish spread with shares at $44.65. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 4.

Those puts have traded for as much as $2.15 this session, more than 2.5 times their purchase price. The stock fell 7.35% in the same time frame, illustrating the kind of leverage that can be achieved with options.

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.

SRLN was last down 0.24% at $41.38.