$PCG put prices rocket 4-fold

Bearish option traders scored huge gains as shares of PG&E fell today.

On Jan. 11, Investitute’s proprietary programs flagged the purchase of 24,800 February $15 puts for $1.50 as part of a bearish spread with shares at $17.50. Volume was well above the strike’s open interest of 6,008 contracts before that session began, showing that this was a new position.

Those puts sold for $7.40 just before today’s closing bell, more than 4 times their purchase price. The stock dropped 52.97% in the same time frame, a large move but still nowhere near that of its options on a relative basis.

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.

PCG plummeted 52.35% to close at $8.38 today. The utility company’s shares collapsed after it was found responsible for the Northern California wildfires, leading it to announce a bankruptcy slated for Jan. 29.