$OXY bears double money quickly

Option traders have logged quick profits on short-term positions opened in Occidental Petroleum (OXY) yesterday.

Yesterday morning on May 28, Market Rebellion’s Unusual Activity Service showed that 5,100 Weekly $12 puts were bought for $0.12 to $0.14 with shares at $13.89. This was clearly fresh buying, as open interest in the strike was only 716 contracts before that session began.

Those puts have traded for as much as $0.29 so far today, more than twice their purchase prices. The stock fell 6.84% in the same time frame, illustrating the kind of leverage that can be achieved quickly with 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.

OXY is down 4.29% to $13.06 this afternoon. The oil and gas producer announced earlier this session that it would reduce its dividend to $0.01 from $0.11.