$XLE put prices push higher

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

On Jun. 13, Market Rebellion’s Unusual Option Activity Service found that 4,500 Weekly $82 puts were, expiring tomorrow, were bought for $2.71 to $2.72 as part of a bearish spread with shares at $84.49. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 375.

Those puts have sold for as much as $10.95 today, over 4 times their purchase prices. The stock fell 15.91% in the same time frame, showing how quickly options can far outperform moves in 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.

XLE was last down 4.87% at $69.81.