$WTW puts jump threefold

Bearish option traders made a killing in Weight Watchers today.

On Feb. 20, Investitute’s proprietary programs flagged the purchase of 4,000 March $35 puts for $5.20 to $5.50 as part of a bearish spread with shares at $30.96. This was clearly a new position, as open interest in the strike was only 463 contracts before the trade occurred.

Those puts traded for up to $15.55 today, 3 times their initial purchase price. The stock dropped 37.31% in the same time frame, a huge move but still 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.

WTW plummeted 34.49% to $19.37 today. The weight-loss company reported weak guidance after the market closed yesterday.