$TLRY puts spark gains

It took only one week for downside option positions in Tilray (TLRY) to turn large gains.

Just last Friday, on Mar. 6, Market Rebellion’s Unusual Activity Service flagged the purchase of 5,000 March $13 puts as part of a bearish roll for $3.04 to $3.04 with shares at $10.53. This was clearly a new position, as open interest in the strike was a mere 107 contracts before that session began.

Those puts closed marked at $8.30 today, more than 2 times their purchase price. The stock dropped 61.82% in the same time frame, illustrating how options can far outperform moves in 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.

TLRY ended the session lower by 32.35% at $4.02 today. The cannabis company announced this morning that it had priced an underwritten registered offering of 7.25 million shares at $4.76.