$IQ put prices double

Option traders doubled their money today on bearish positions opened in Chinese company IQiyi (IQ).

On Jul. 14, Market Rebellion’s Unusual Options Activity programs detected the the purchase of 5,000 August $12.50 puts for $0.89 with shares at $12.63. Volume was clearly above the previous open interest of 3,671 contracts, indicating that this was a new position.

Those puts sold for as much as $1.91 today, more than 2 times their purchase price. The stock fell 14.01% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

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.

IQ fell 3.53% to close at $10.92 today. The Beijing-based online entertainment service is estimated to report earnings next on Aug. 12.