$ZG puts double in one day

Option traders who opened bearish positions in Zillow on Friday racked up large gains today, just one session later.

On Jan. 18, Investitute’s proprietary programs flagged the purchase of 2,000 February $30 puts for $0.95 with shares at $33.84. This was clearly a new position, as open interest in the strike was only 281 contracts before that session began.

Those puts traded for as much as $1.90 just before today’s closing bell, twice their purchase price. The stock fell 8.1% at the same time, showing how quickly 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.

ZG dropped 7.84% to $31.13 today. The real-estate company’s intraday decline accelerated after housing analyst Ivy Zelman of Zelman & Associates said Zillow was a “sell” on CNBC’s “Halftime Report” early this afternoon.