Bearish option traders have turned huge profits with the sharp decline in the U.S. Oil Fund LP (USO - Get Report) .

On October 3, Investitute's proprietary programs flagged the purchase of 10,000 November $15.50 puts for $0.31 with shares at $16.15. Volume was far above the strike's open interest of 3,209 contracts, showing that this was a new position.

With oil at multiyear highs, these investors may have taken the position to buy puts to protect profits, but remain in their long position.

Those puts traded for $3.80 Tuesday afternoon, more than 12 times their purchase price. The stock plunged 27.55% in the same period, a large move but nowhere near that of its options 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.

USO dropped 6.33% to $11.69 Tuesday, November 13. The exchange-traded fund dipped to $11.61 in afternoon trading, its lowest level since December 2017.