Whiting bears double their money

Downside options trades are drawing significant profits as Whiting Petroleum suffers.

On May 30, Investitute’s scanners found that 16,000 July 8 puts were purchased in one print for $1.15 with shares at $7.23. Open interest in the strike was just 294 contracts before the trade appeared, showing that it was a new position.

Those puts traded for $2.85 today, more than doubling in value. The stock dropped 28.8 percent in the same period, a large move but still one that pales in comparison to that of 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.

WLL fell 4.23 percent to $4.98 today. Shares of the oil and gas producer have continued to slide with the price of crude, falling more than 50 percent since early March.