$WY bears quadruple money

Shares of Weyerhaeuser have declined steadily in the last month, and bears have quadrupled their money in downside option positions.

On April 29, Investitute’s proprietary programs flagged the purchase of 3,150 July $24 puts in one print for $0.35 with shares at $26.76. This was clearly a new position, as open in interest in the strike was only 175 contracts before the trade occurred.

Those puts sold for as much as $1.45 today, more than 4 times their purchase price. The stock dropped 13.23% in the same time period, a large move but nowhere near that of its options 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.

WY ended today’s session up 0.44% at  $23.01, but the stock is down sharply since the lumber company reported weak sales on April 26.