$RIG put prices double overnight

Bearish option traders posted quick gains in Transocean yesterday.

On Thursday, Investitute’s market scanners identified the purchase of 4,950 March $11 puts for $0.56. The trade was part of a bearish three-way spread with shares at $11.43.

Those puts ended yesterday’s session trading for $1.09, doubling in price just 24 hours later. The stock fell 9.8% at the same time, showing how quickly options can far outperform moves in their underlying shares.

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.

RIG fell 6.35% to $10.32 yesterday. The offshore driller, which reports earnings after the close on Feb. 20, dropped along with the rest of the energy sector in the broader market selloff.