Bears post quick gains in $OXY

It took just four sessions for option traders to triple their money on downside positions in Occidental Petroleum.

On May 7, Investitute’s proprietary programs found that 2,500 Weekly $59 puts expiring this afternoon were bought for $1.19 to $1.29 as part of a bearish spread with shares at $58.60. Volume was well above the strike’s existing open interest, indicating that this was fresh buying.

Those puts sold for as much as $4.40 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.

It is the third winning position in the name posted on Investitute in as many weeks as option traders have profited in both directions.

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.

OXY was down 2.41% to $54.97 today. The stock fell after Chevron said yesterday that it would not raise its rival takeover bid for Anadarko Petroleum.