Put buyers score as $AA drops

Bearish option traders have doubled their money in Alcoa.

On Nov. 28, Investitute’s market scanners identified the purchase of 5,000 December $28 puts for $0.52 with shares at $31.15. Volume was nearly twice the strike’s previous open interest, showing that this was fresh buying.

Those puts traded up to $1.26 today, about 2.5 times their purchase prices. The stock fell 10.02% today, illustrating the kind of leverage that can be achieved 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.

AA was down 1.73% to $28.32 today. The aluminum producer has fallen sharply amid persistent concerns over U.S.-China trade tariffs.