$TJX bears double money in day

Option traders rang up profits today on downside positions opened in TJX only one session earlier.

Just yesterday, Investitute’s proprietary programs flagged the purchase of 2,400 December $47.50 puts for $1.15 to $1.25 with shares at $49.40. These were clearly new positions, as open interest in the strike was only 425 contracts before the activity appeared.

Those puts traded for as much as $2.50 this morning, twice their purchase prices. The stock was down 6.28% in the same time, illustrating the kind of leverage that can be achieved quickly 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.

TJX was down 4.37% today to close at $46.82. The discount retailer dropped after its holiday-shopping forecasts came in lower than expected this morning.