Bears triple their money in $BK

Option traders posted substantial gains today in short-term downside positions on Bank of New York Mellon.

On March 13, Investitute’s market scanners found that 2,040 Weekly $56 puts expiring this Friday were purchased for $0.62 to $0.68 as part of a bearish roll with shares at $56.40. This was clearly a new position, as open interest in the strike was only 67 contracts before the activity appeared.

Those puts were marked at $1.72 today, nearly 3 times their original purchase price. The stock fell 3.7% in the same time frame, illustrating the kind of leverage that options can provide over 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.

BK was down 1.2% to $54.34 today. The bank has declined along with the rest of the financial sector in the last week.