$TGT bears shop for gains

Bearish option traders out shopping for gains found them with downside option positions in Target (TGT) today.

On Mar. 30, Market Rebellion’s Unusual Option Activity Service identified the purchase of 2,000 Weekly $93 puts  expiring today, Apr. 3, at the same time for $1.08 to $1.10 with shares at $96.74. The volume was well above the open interest of 49 contracts at the time, indicating that this was a new position.

Those puts traded for as much as $2.51 today, more twice their purchase prices. The stock fell 6.46% at the same time, showing how quickly 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.

TGT closed the session lower by 1.9% to $92.57, the retail chain announced yesterday that it would be actively monitoring guest traffic in order to reduce the spread of the coronavirus.