How $CSIQ bears turned quick profits

Option traders took advantage of volatile action in Canadian Solar today, cashing in on downside positions when the stock briefly pulled back.

On Wednesday, Investitute’s proprietary programs found that 4,000 Weekly $16 calls that expired this afternoon were purchased for $0.15 to $0.40 with shares at $16.18. These were clearly new positions, as open interest in the strike was only 437 contracts before the trades occurred.

Today those puts sold for $0.70, more than 4 times their original price. The stock was down just 5.4 percent in the same time, illustrating how ptions 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.

CSIQ ended today up 3.78 percent to $16.46 but dipped into the red at $15.15 earlier in the session. The solar-wafer producer initially fell after the U.S. International Trade Commission ruled today that domestic companies were harmed by foreign imports.