$WLL bears double their money

Option traders have turned quick profits on downside positions in Whiting Petroleum.

On Dec. 4, Investitute’s proprietary programs flagged the purchase of 3,500 January $30 puts for $1.93 to $1.95 with shares at $32.08. This was clearly fresh buying, as volume in the strike was well above its open interest of 1,747 contracts before that session began.

Those puts traded for as much as $4.13 this morning, more than twice their purchase prices. The stock fell 12.59% in the same time frame, showing how quickly options can far outperform their underlying shares 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.

WLL was down 3.55% to $28.84 today. The oil and natural-gas producer has dropped with the price of crude in recent months.