Put buyers score big in $TUR

The iShares MSCI Turkey Fund plunged today, handing major profits to bearish option traders.

Last month, Investitute’s proprietary programs identified two bearish trades in the same contracts within the span of a week:

–On July 12: 2,428 January 26 puts were bought for $2.85 above open interest of 50 contracts with shares at $26.40.
–On July 17: 6,000 January 26 puts were purchased for $2.40 to $2.45 above open interest of 2,458 contracts with shares at $27.40.

Those puts traded up to $7.10 this morning, about 3 times their last purchase prices. The stock fell 27.66% in the same time period, a large move but nowhere near that of its 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.

TUR dropped 14.53% today to close at $21.42. The exchange-traded fund fell sharply with the Turkish lira, pressuring markets worldwide.