Bears make a killing in $MOS

Option traders quadrupled their money on downside positions in Mosaic today.

On March 18, Investitute’s market scanners identified the purchase of 4,000 June $27 puts for $0.99 as part of a bearish roll with shares at $28.73. This was clearly a new position, as volume was well above the strike’s existing open interest of 1,539 contracts.

Those puts traded for as much as $3.88 today, about 4 times their purchase price. The stock dropped 19.14% in the same time period, illustrating how options

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.

MOS dropped 7.99% to $23.25 today. The fertilizer company fell despite topping quarterly estimate son the top and bottom lines after the market closed yesterday.