$XME bears stack up quick gains

Option traders have doubled their money on downside positions in the SPDR S&P Metals and Mining Fund (XME).

Just yesterday on Aug. 29, Market Rebellion’s Unusual Option Activity Service found the purchase of 13,000 September $50 puts, as part of a bearish spread, for $1.12 above the existing open interest of 4,704 with shares at $52.18.

Those puts have traded for as much as $2.30 this session, over 2 times their purchase price. The stock fell 5.96% 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.

XME was last down 4.21% to $49.57 today.