Bears triple their money in $XLU

Bearish put positions opened just a week ago in the SPDR Utilities Fund (XLU) are already turning sizable profits.

On Nov. 1, Market Rebellion’s proprietary programs flagged the purchase of 4,891 Weekly $63.50 puts, expiring on Nov. 29, for $0.52 as part of a bearish spread with shares at $64.11. Volume was above the strike’s open interest of 222 contracts, showing that it was a new position.

Market Rebellion co-founder Jon Najarian made note of some other unusually bearish activity in the XLU earlier this week on CNBC’s “Halftime Report.”

Those puts have traded for $1.90 today, more than 3.5 times their purchase price. The stock has declined 3.79% in the same time frame, illustrating the kind of leverage that can be achieved with 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.

XLU is currently lower this session by 0.52% at $61.68. The so called “safe-haven trade” has declined since late October amid positive trade developments between the U.S. and China.