$UAA put prices triple

Option traders are reaping large profits on bearish positions in Under Armour (UAA) today.

On Jan. 3, Market Rebellion’s Unusual Activity Service flagged the purchase of 5,000 February $22.50 puts for $1.86 to $1.89 with shares at $21.85. This was clearly a new position, as open interest in the strike was a mere 23 contracts before that session began.

Those puts have traded for as much as $5.55 so far today, about 3 times their average purchase price. The stock fell 18.93% in the same time frame, underscoring how 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.

UAA is down 18.51% to $16.67 this morning. The athletic-apparel retailer issued weak guidance before the market opened today.