Bears mine major gains in $FCX

Option traders are mining for major gains in downside positions in Freeport-McMoRan (FCX) today.

On Jun. 9, Market Rebellion’s Unusual Option Activity Service found that 3,453 Weekly $40 puts, expiring on Jul. 1, were bought for $1.43 as part of a bearish spread with shares at $41.20. This was clearly fresh buying, as open interest in the contract was just 75 before the activity appeared.

Those puts traded up to $8.70 this session, over 6 times their purchase prices. The stock fell 24.03% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

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.

FCX was last down 7.32% at $31.53.