$X bears double their money

It took just over a week for bearish option traders to double their money in U.S. Steel.

On Oct. 15, Investitute’s tracking systems showed that 10,200 November $26 puts were purchased for $0.82 to $0.85 with shares at $28.24. This was clearly a new position, as open interest in the strike was only 1,787 contracts before that session began.

Those puts traded for $1.65 this morning, double their average purchase price. The stock fell 6.97% in the same time frame, illustrating the kind of leverage that can be achieved quickly 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.

X was down 3.5% to $26.77 today. The company traded down on trade concerns and fears of a slowing economy and its affect on industrial demand.