$STX bears double their money

Traders cashed in quick profits in Seagate Technology (STX) today.

On Nov. 25, Market Rebellion’s Unusual Activity Service flagged the purchase of 3,000 Weekly $60 puts expiring next Friday for $1.18 to $1.30 with shares at $59.93. This was clearly fresh buying, as open interest in the strike was only a mere 7 contracts before that session began.

Those puts traded for as much as $2.50 today, double their original purchase prices. The stock fell 3.55% in the same time period, underscoring how 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.

STX dropped to an intraday low of $57.79 this afternoon before pulling back up to close off on the session by 1.89% at $58.21. The digital-storage company fell alongside other technology companies with trade risks again in the headlines.