$GE bears triple their money

It took just over one week for option traders to triple their money in downside positions in General Electric.

On May 14, Investitute’s market scanners found that 24,000 Weekly $10 puts expiring on 24May were bought for $0.15 as part of a bearish roll with shares at $10.29. Open interest in the strike was only 4,515 contracts before that session began, showing that this was a new position.

Those puts traded for as much as $0.53 today, more than 3.5 times their purchase price. The stock fell 7.77% in the same time frame, illustrating how quickly options can far outperform moves in their underlying shares on a relative basis.

It is the fifth winning bearish trade in the name posted on Investitute in the last couple of months.

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 3.43% to close at $9.56 today. The industrial giant’s shares traded weaker with the broader market and after repeating guidance for the fiscal year, yesterday, in-line.