Poor quarterly results from helicopter company Bristow Group has translated to strong gains for bearish option traders.
Back on March 6, Investitute’s proprietary programs found that 3,170 June $12.50 puts were purchased for $1.20 as part of bearish roll with shares at $14.76. Open interest in the strike was a mere 61 contracts before the trade occurred, showing that this was a new position.
Those puts ended today’s session listed at $5.25, a profit of more than 330 percent. The stock lost 50 percent in the same period, a steep move but still far less than the relative gain in the options.
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.
BRS fell 3.16 percent to close at $7.36 today after dipping to a multi-year low of $7.16 in the morning. The company, which provides helicopter service to offshore energy drillers, gapped down from above $14.50 on Wednesday morning after missing earnings estimates and giving disappointing guidance.