$BBBY bears post fourfold gains

Bed Bath & Beyond fell sharply today on poor quarterly results, yielding huge profits for downside option positions.

On Sept. 17, Investitute’s proprietary programs flagged the purchase of 10,000 November $17.50 puts for $0.62 to $0.65, including one print of 8,133, with shares at $19.39. Volume was well above the strike’s open interest of 7,299 contracts, showing that this was fresh buying.

Those puts traded for $3.40 today, more than 5 times their purchase prices. The stock dropped 26.92% in the same time frame, underscoring how options can far outperform moves in their underlying shares.

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.

BBBY plunged 21% to $14.86 today. The home-products retailer missed earnings estimates and issued weak guidance after the market closed yesterday.