$HAL puts double overnight

Bearish option traders turned big gains on short-term positions in Halliburton today.

Just yesterday, Investitute’s market scanners identified the purchase of 4,500 May $28.50 puts for $0.46, as part of a bearish roll, with shares at $29.63. Open interest in the strike was only 50 contracts before the trade occurred, showing that this was a new position.

Those puts sold for as much as $0.94 today, just over twice their initial purchase price. The stock fell 4.18% in the same time frame, illustrating how quickly options can far outperform 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.

HAL fell to an intraday low of $28.29 today and closed at $28.85, off 1.23% for the session. The energy-services company had its price target cut this morning by SunTrust to $39 from $44, while at the same time the price of crude pulled back from its recent year-to-date highs.