Bears see puts soar eight-fold in $GE

General Electric continued its long slide today, turning huge profits on downside option positions.

On Dec. 27, Investitute’s tracking systems identified the purchase of 20,000 February $16 puts for $0.18 as part of a bearish roll with shares at $17.49. This was clearly a new position, as open interest in the strike was only 377 contracts before the trade occurred.

Those puts sold for $1.50 at the end of today’s session, more than 8 times their purchase price. The puts fell 16.9% in the same time period, illustrating how options can far outperform moves in 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.

GE was down 5.18% to $14.46 today. The industrial giant’s share price has been cut in half in the last year.