$MT bears double money

Option traders racked up profits from downside positions in ArcelorMittal (MT) for the third time this month.

On May 21, Investitute’s market scanners flagged the purchase of 6,000 June $15 puts for $0.25 with shares at $16.67. This was clearly a new position, as open interest in the strike was only 340 contracts before the trade occurred.

Those puts sold for $0.68 in the last half-hour of today’s session, more than 2.5 times their purchase price. The stock dropped 10.38% in the same time frame, illustrating how options can far outperform moves in their underlying shares on a relative basis.

It is the third winning put trade in the name posted on Investitute since May 8.

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.

MT was down 2.8% to $14.92 today, a penny above a new 52-week low reached minutes before the closing bell. The steel maker announced further reductions in production yesterday, citing weak global demand.