Newcastle Utd owner Mike Ashley
Newcastle Utd owner Mike AshleyGetty

Sportswear billionaire Mike Ashley is betting that Tesco shares will rise in the long term.

Ashley, who owns retailer Sports Direct and the football club Newcastle United, entered into a put option with Goldman Sachs over 23 million shares, leaving the group's maximum exposure to Tesco at £43m (€55m, $70m).

"This investment reflects Sports Direct's growing relationship with Tesco and belief in Tesco's long-term future," said Sports Direct.

A put option allows the owner of shares to buy or sell a specified amount of an underlying security at a specified price within a specified time.

If Tesco shares are below a certain price (exercise price) when the option expires, Sports Direct could lose money as it must buy Tesco shares at the agreed level or pay the difference in cash.

Sports Direct will make money if the Tesco shares are above the exercise price when the put expires.

Tesco revealed that it had overstated its profit by £250m which sent stocks spiralling.

Tesco shares are trading flat on 25 September although the stock price has tumbled nearly 15% over the last five days to 196.00p.

Tesco had already cut its full-year profit forecast from £2.8bn to £2.4bn in August.

The grocer has also since suspended four executives and has launched an internal investigation, led by Big Four accountancy Deloitte.

The Financial Reporting Council said it is observing the developments and may launch a probe after the results of the internal investigation are published.

Meanwhile the chairman of a parliamentary committee warned that Tesco bosses could face a grilling.