$GE put prices rocket six-fold

Bearish option traders have racked up exponential profits as General Electric has continued to decline.

On Oct. 18, Investitute’s tracking systems detected the purchase of 92,000 January $12 puts for $0.77 as part of a bearish spread with shares at $12.34. This was clearly a new position, as volume was far above the strike’s open interest of 50.784 contracts before that session began. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those puts traded for as much as $4.57 this afternoon, 6 times their purchase price. The stock plunged 39.7% in the same time period, a huge move but still nowhere near that of its 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.

GE fell another 5.54% today to close at $7.50. The struggling industrial giant got a brief reprieve with the appointment of a new CEO two months ago but has accelerated its downtrend since late October.