$PTON puts work out quickly

Option traders are riding for fast profits on downside positions in Peloton (PTON) today.

Today, on Jan. 20, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 12,000 January $31 puts, expiring tomorrow, for $0.40 to $3.50 with shares at $26.34. Volume was well above the strike’s previous open interest of 3,519 contracts, showing that this was fresh interest.

Those puts have traded up to $9.02 today, about double their purchase prices. The stock declined 10.59% 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.

PTON was last down by 16.37% at $26.63 during afternoon trade.