$GE keeps on giving for bears

It took just three sessions for option traders to double their money in downside positions in General Electric.

On April 5, Investitute’s market scanners found that 50,000 Weekly $9.50 puts expiring on May 3 were bought for $0.27 as part of a bearish roll with shares at $10.08. Open interest in strike was only 818 contracts before that session began, showing that this was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those puts traded for as much as $0.71 today, more than 2.5 times their purchase price. The stock fell 9.03% in the same time frame, illustrating how quickly options can far outperform moves in their underlying shares on a relative basis.

It is the third winning bearish trade in the name posted on Investitute in the last month.

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.

GE was down 2.85% to $9.22 today. JP Morgan analyst Stephen Tusa downgraded the industrial company to “underweight” from “neutral” yesterday while cutting its price target to $5 from $6.