$XLE put prices keep pushing higher

The SPDR Energy Fund (XLE) is again pumping profits to bearish option traders this session.

On Jun. 6, Market Rebellion’s Unusual Option Activity Service found that 2,000 Weekly $86.50 puts, expiring this Friday, were bought for $2.73 as part of a bearish spread with shares at $89.09. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 6.

Those puts closed marked for $15.55 today, over 5.5 times their purchase price. The stock fell 21.76% in the same time frame, showing how quickly options can far outperform moves in their underlying shares on a relative basis.

This marks the second winning trade in the ETF posted on Market Rebellion in the last month.

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.

XLE was down 3.97% to close at $69.70.