Bears rack up profits as $ORCL falls

Downside option positions saw significant gains as Oracle pulled back today.

On Sept. 6, Investitute’s market scanners found that 5,100 September $51 puts were purchased for $1.07 to $1.15 with shars at $51.12. These were clearly new positions, as volume was well above the strike’s open interest of 1,225 contracts.

Today those puts traded up to $2.47, more than doubling in value. The stock was down just 5 percent at the same time, showing how quickly options can far outpace moves in 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.

ORCL dropped 7.67 percent to $48.74 today. The cloud-computing company beat earnings and revenue estimates after the market closed yesterday, but shares fell with disappointing guidance.