Bearish option traders doubled their money Wednesday as Inc. (JD) - Get Report fell to a new 52-week low.

On Tuesday, September 4, Investitute's proprietary programs flagged the purchase of 10,400 January $28 puts for $1.72 with shares at $29.45. This was clearly a new position, as open interest in the strike was only 2,768 contracts before the trade occurred.

These investors may have been protecting their portfolios, hedging against any further downside in the stock, or perhaps making an outright bearish bet.

New purchasers of those January $28 puts paid up to $3.45 Wednesday, double their initial purchase price and in only one session. The stock fell 11.68% in the same time frame, underscoring how quickly options can far outperform moves in their underlying shares. Those investors, should their bearish narrative still hold fast, could sell half of their position, letting the remainder trade as 'house money.'

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. dropped 10.64% to $26.30 Wednesday, September 5. The Chinese e-commerce company's shares continued their slide to new lows after news was released the previous weekend, questioning the conduct of its CEO.

Contributed by Investitute. TheStreet has an affiliate partnership with Investitute.

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