$UPS puts deliver profits

Option traders scored big profits on downside positions in United Parcel Service, Inc. (UPS) today.

On Aug. 11, Market Rebellion’s Unusual Activity Service found that 5,000 August $175 puts were bought for $0.80 to $1.10 above the existing open interest of 1,891 contracts with shares at $178.67.

Those puts have traded for as much as $2.90 this session, a 163.64% return, while the stock fell 3.15% 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.

UPS was last down 1.18% at $173.44.