Bears score in Range Resources

Range Resources hit a 52-week low after weak quarterly results, resulting in exponential gains in downside option positions.

On June 19, Investitute’s tracking systems detected the purchase of 4,100 August $23 puts for $1.60 to $1.90 against with shares at $22.99. These were new positions, as there was no open interest in the strike before they appeared.

Those puts traded today for $5.15, tripling in value. The stock fell 22.2 percent in the same period, showing how 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.

RRC dropped 11.82 percent today to close at $17.90 after hitting a 52-week low of $17.69 in the final hour of the session.The natural-gas and oil producer missed earnings forecasts last night.