Bears turn quick gains in $OXY

Bearish option traders that piled into Occidental Petroleum last week are already seeing their positions paying off.

On April 17, Investitute’s market scanners found that 6,000 August $65 puts were purchased for $1.10 with shares at $63.70. These were clearly new positions, as open interest in the strike was a mere 594 contracts before that session began.

Those puts traded for $1.92 this morning, 1.75 times their purchase price. The stock fell 5.48% in the same time frame, showing the kind of leverage that can be achieved through options. Investitute co-founder Jon Najarian highlighted the work of Investitute’s market scanners and proprietary algorithm in both these puts, and Anadarko calls, in an article published earlier this morning.

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.

OXY made an intraday low of $59.76 this morning before pulling back up to close at $62.02, still off by 0.53% on the session. The oil and natural-gas producer fell after disclosing this morning that it would pay $57 billion in cash and stock to acquire Anadarko Petroleum (APC), a premium to Chevron’s (CVX) April 12 announcement that it had offered $33 billion in consideration.