$VALE puts post quick gains

Option traders doubled their money today on bearish positions opened in Vale (VALE) only one session earlier.

On Aug. 9, Investitute’s tracking systems identified the purchase of 14,000 August $11 puts for $0.07 and $0.08 with shares at $11.61. This was clearly fresh buying, as open interest in the strike was only 405 contracts before the activity appeared.

Those puts traded traded for as much as $0.16 so far today, more than double their average purchase price. The stock fell 3.44% in the same time frame, 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.

VALE is down 1.69% to $11.36 this afternoon. The iron-ore producer has fallen with other Latin American names amid heightened trade concerns and the surprising turn in Argentina’s presidential race.