$BK put prices skyrocket sixfold

Bank of New York Mellon has fallen sharply in recent days, yielding huge profits on downside option positions.

On Tuesday, Investitute’s tracking systems showed that 3,060 Weekly $53.50 puts expiring on March 29 were purchased for $0.44 as part of a bearish roll with shares at $54.73. Volume dwarfed the strike’s open interest of 18 contracts, showing that it was a new position.

Those puts traded for $2.70 today, more than 6 times their purchase price. The stock dropped 6.9% in the same time frame, underscoring how quickly options can far outperform moves in their underlying shares. It was the second winning BK put trade posted on Investitute in as many days.

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 2.48% to $50.73 today. The regional bank has pulled back with the financial sector and the broader market this week.