$AKS put prices triple overnight

It took less than 24 hours for bearish option traders to turn substantial profits in AK Steel.

Just yesterday, Investitute’s proprietary programs found that 4,700 Weekly $5 puts expiring this Friday were purchased for $0.12 to $0.15 with shares at $5.29. Volume was well above the strike’s open interest of 2,508 contracts, indicating that this was fresh buying.

Those puts traded for as much as $0.39 just before today’s closing bell, more than 3 their initial purchase price. The stock fell 12.48% at the same time, showing how quickly options can far outperform moves in their underlying shares.

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.

AKS dropped 13.62% to $4.63 today. The steel maker’s second-quarter earnings missed estimates after the market closed yesterday.