$TPR put prices soar overnight

Bearish traders pocketed exponential profits today on option positions opened in Tapestry only 24 hours earlier.

Just yesterday, Investitute’s proprietary programs flagged the purchase of 1,750 May $50 puts in one print for $0.50 with shares at $54.54. This was clearly a new position, as open interest in the strike was only 768 contracts before the trade occurred.

Those puts sold for $4.10 this morning, more than 8 times their purchase price. The stock dropped 15.4% at the same time, underscoring how quickly 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.

TPR fell 11.74% to $47.46. The company, formerly Coach, issued weak guidance this morning from problems in its Stuart Weitzman and Kate Spade brands.