$WW put prices spike intraday

Option traders are turning big profits on downside positions in Weight Watchers (WW) today.

Today on Jan. 4, Market Rebellion’s Unusual Activity Service found that 3,800 Weekly $7 puts, expiring Jan. 5, were bought for $0.20 to $0.30 with shares at $7.26. This was clearly fresh buying, as open interest in the strike was just 171 contracts before the activity appeared.

Those puts have traded for as much as $0.65 this session, a 116.67% return, while the stock fell 11.71% 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.

WW was last down 12.96% at $6.65 today.