Bears double their money in $CRC

California Resources (CRC) shares are making new lows today, handing profits to bearish option traders.

On Oct. 10, Market Rebellion’s proprietary programs flagged the purchase of 2,300 May $8 puts for 2.92 and $2.93, as part of a bearish roll, with shares at $8.44. This was clearly a new position, as open interest in the strike was a mere 30 contracts before that session began.

Those puts traded for $6.00 today, twice their purchase price. The stock fell 70.97% in the same time, showing how options can far outperform 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.

CRC fell to $0.93 this afternoon and was last off by 48.39% at $1.28. The oil and gas producer has seen shares trade sharply lower intraday after a Bloomberg report that the company is seriously considering bankruptcy.