$TWTR put prices fly higher

Option traders are making exponential gains on bearish positions opened in Twitter (TWTR) last week.

On Apr. 22, Market Rebellion’s Unusual Activity programs flagged the the purchase of 10,000 Weekly $62.50 puts, expiring next Friday, May 7, for $2.30 to $2.36 as part of a bearish spread with shares at $66.31. Volume was clearly above the previous open interest of 92 contracts, indicating that this was a new position.

Market Rebellion co-founder Jon Najarian noted the activity at the time on his 3@3 broadcast that session.

Those puts have traded for as much as $6.89 this session, nearly triple their purchase prices. The stock fell 15.62% in the same time frame, illustrating the kind of leverage that can be achieved quickly with 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.

TWTR was last down by 13.96% to $56.00 in late-session trade. The social-media company beat earnings estimates but guided its Q2 in line after the marker closed yesterday.