$GDXJ bears mine deep for profits

Bearish option traders have quadrupled their money on shorter-term put strategies in the VanEck Vectors Junior Gold Miners Fund (GDXJ).

On Sep. 14, Market Rebellion’s Unusual Activity tracking systems found that 5,200 Weekly $57 puts, expiring tomorrow, Sep. 25, were purchased for $0.81 as part of a bearish spread with shares at $60.58. Volume was far above the strike’s open interest of 107 contracts before the trade occurred, showing that it was a new position.

Those puts have traded for as much as $4.00 so far today, over 4 times their purchase price. The stock fell 11.93% in the same time period, illustrating the kind of leverage that can be achieved through 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.

GDXJ is higher this session at $54.60 up 2.79%, recovering from a down open this morning. Gold miners have fallen alongside the price of gold, which was last down about 4.5% from the start of last week (Sep. 14).