$MT put buyers score again

Bearish option traders collected big profits in ArcelorMittal today for the second time in less than a week.

On May 8, Investitute’s tracking systems detected the purhcase of 2,500 May $19.50 puts for $0.68 as part of a bearish roll with shares at $19.66. This was a new position, as there was no open interest in the strike before the trade occurred.

Those puts traded sold for $2.39 today, 3.5 times their purchase price. The stock dropped 12.56% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

It is the second winning trade in the name posted on Investitute in the last four sessions.

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.

MT fell 6.5% to $17.26 today. The steel maker reported mixed quarterly results on May 9.