Arch Coal has rallied hard since trading down to $1 early this month, and traders appear to be protecting those gains.

optionMONSTER's Depth Charge system detected heavy buying in the October 4 puts this morning, with more than 5,000 trading mostly for $1.11 and $1.15. This represents new positioning, as open interest in the strike was just 1 contract before the trades appeared.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position. (See our Education section)

ACI is up 28.09 percent to $6.52 in early trade. The coal miner is still down more than 70 percent this year but bounced from its $1 low on Aug. 6 .

Total option volume in the name is already quadruple its full-session average for the last month. Overall puts are eclipsing calls by nearly 2 to 1.



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