$TPR puts skyrocket 14-fold

Bearish option traders made a killing in Tapestry (TPR) today.

On May 10, Our tracking systems detected the purchase of 3,500 August $25 puts for $0.40 to $0.45 with shares at $31.93. This was clearly fresh buying, as open interest in the strike was a mere 130 contracts before that session began.

Those puts traded for as much as $5.95 today, 14 times their average purchase price. The stock plummeted 40.28% in the same time frame, a huge move but still nowhere near that of its options no 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.

TPR dropped 22.24% to $19.44 today. The retailer, formerly Coach, missed sales estimates and lowered its outlook this morning.