$SWKS bears turn fivefold gains

Skyworks Solutions dropped sharply along with other iPhone suppliers today, turning huge profits on downside option positions.

Way back on March 12 last year, Investitute’s market scanners identified the purchase of 5,000 January $90 puts in one print for $5.05 with shares at $115.20. This was clearly a new position, as open interest in the strike was only 1,053 contracts before that session began.

Those puts traded for $28 today, more than 5.5 times their purchase price. The stock has plunged down 46.4% in the same time period, a huge move but still nowhere near that of its options 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.

SWKS was down 10.65% to close at $60.72 today. The chip maker fell after Apple lowered its outlook after the market closed yesterday.