$SVMK put prices triple overnight

Bearish option trades on SurveyMonkey (SVMK) tripled today, one day after they were opened.

Just yesterday, Market Rebellion’s unusual activity programs flagged the purchase of 5,000 February $25 puts for $0.40 to $0.78 with shares at $27.83. This was clearly a new position, as open interest in the strike was only 144 contracts before the activity appeared.

Those puts traded up to $2.35 today, over 3.5 times their purchase prices. The stock fell 17.79% in the same time period, underscoring how options can far outperform their underlying shares.

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.

SVMK closed the session down 13.39% at $23.80. The cloud-based online survey company missed earnings expectations after the closing bell yesterday.