Bears post quick gains in $CVX

It took just three sessions for option traders to double their money on downside positions in Chevron (CVX).

On Sep. 22, Market Rebellion’s Unusual Activity tracking systems found that 2,100 October $75.50 puts were purchased for $2.72 to $2.78 as part of a bearish spread with shares at $76.06. Volume was far above the strike’s open interest of 114 contracts before the trade occurred, showing that it was a new position.

Those puts were last marked for $4.95 today, more than 3.5 times their average purchase price. The stock fell 6.74% in the same time frame, underscoring 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.

CVX was last down 0.21% to $71.64 today, rebounding after a lower open this morning. The energy company’s shares have declined alongside its peers as the price of WTI crude has continued to trade around the $40 per barrel mark.