$TTWO put prices double overnight

Take-Two Interactive Software (TTWO) is trading lower this session, delivering fast profits to put purchasers that opened positions yesterday.

On Aug. 8, Market Rebellion’s Unusual Option Activity Service found that 2,000 Weekly $126 puts, expiring this Friday, were bought for $3.69 to $3.98 as part of a bearish spread with shares at $129.37. This was clearly fresh buying, as open interest in the contract was just 42 before the activity appeared.

Those puts have traded up to $8.05 this session, over 2 times their purchase prices. The stock fell 8.67% in the same time frame, showing how quickly options can far outperform moves in their underlying shares 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.

TTWO is currently lower by 4.19% at $120.25.