Bears make fast gains in $CSCO

Cisco (CSCO) is delivering gains to bearish option traders today, tripling their money over the weekend.

Just this past Friday on Oct. 23, Market Rebellion’s Unusual Activity scanners identified the purchase of 4,000 Weekly $39 puts expiring this Friday, Oct. 30, for $0.55 to $0.62 with shares at $38.82. These were clearly new positions, as open interest in the strike was a mere 1,141 contracts before the activity appeared.

Those puts traded up to $1.88 this afternoon, more than 3 times their purchase prices. The stock declined 4.22% in the same time frame, illustrating the kind of leverage that can be achieved through 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.

CSCO was last down 3.41% today at $37.50. The network-technology giant is scheduled to report earnings on Nov. 12 after the close.