$UAA bears post quick gains

It took barely a week for option traders to triple their money on downside positions in Under Armour (UAA).

On Feb. 4, Market Rebellion’s Unusual Activity Service flagged the purchase of 6,700 February $20 puts for $0.98 to $1.02. The trade, which was part of a bullish spread, occurred with shares at $20.87.

Those puts have traded for as much as $3.35 so far today, more than 3 times their purchase prices. The stock fell 20.32% in the same time frame, underscoring how quickly options can far outperform moves in their underlying shares on a relative basis.

It is the second winning downside trade in the name posted on Market Rebellion in as many days.

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.

UAA is up 1.33% to $16.81 this morning but dropped 18.88% in the previous session. The athletic-apparel retailer issued weak guidance before the market opened yesterday.