$TUR bears score big gains

Option traders have scored exponential profits on a series of downside positions opened this week in the iShares MSCI Turkey Fund.

Investitute’s tracking systems detected bearish option activity in the name every session this week in the same expiration:

–On March 25, 7,100 18April $25 puts were bought in one print for $0.75 above open interest of 288 contracts with shares at $25.53. Those puts traded up to $1.95 today, 2.6 times their purchase price.
–On March 26, 4,450 18April $23 puts were purchased for $0.25 above open interest of 568 contracts with the stock at $25.47. Those options last traded for up to $0.98, just shy of 4 times their entry price.
–On March 27 (today), 3,485 18April $21 puts were bought for $0.25 and $0.30 above open interest of 2 contracts with shares at $23.85. Those puts traded for $0.40 this afternoon, 1.6 times their initial purchase price.

This unusual activity was highlighted on Investitute’s proprietary chat service in real-time, as similar trades proved precient in 2018. Puts purchased last July tripled in value less than a month later when the Turkish lira plunged.

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.

TUR is down sharply since ending last week above $27, dropping another 7.67% today to close at $23.71. The exchange-traded fund, which primarily tracks the performance of the Istanbul Stock Exchange, dropped after Turkish authorities opened an investigation this weekend into JP Morgan after it published a bearish note on the lira.

Regulators in that country imposed measures aimed at thwarting attempts to short Turkey’s currency and avoid a repetition of last year’s resulting market turmoil. But equities sold off today when the cost to borrow the lira tripled to 1,200% overnight.