$CBS puts rocket fivefold in a day

Bearish option traders posted huge gains in CBS today, one session after it lost a key court ruling over control of the company.

Just yesterday, Investitute’s proprietary programs found that 4,100 May $52 puts expiring tomorrow were purchased from $0.18 to $0.28 with shares at $53.81. This was clearly fresh buying, as open interest in the strike was only 50 contracts before the trades occurred.

Those puts sold for $1.26 today, more than 5 times their purchase prices. The stock dropped 5.4% at the same time, underscoring how quickly 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.

CBS was down 4.1% today to close at $51.61. The stock declined after a Delaware judge denied the media company’s request to strip its controlling shareholder, National Amusements, of its voting power.