$CIEN bears dial in for profits

Option traders posted enormous profits in Ciena (CIEN) today on downside positions opened just last week.

On Aug. 28, Market Rebellion’s Unusual Activity Service found that 3,750 Weekly $53.50 puts expiring tomorrow were bought for $1.19 to $1.33 with shares at $56.45. This was clearly a new position, as open interest in the strike was only 60 contracts before the trade occurred.

Those puts sold for as much as $9.95 today, at least 7 times their purchase prices. The stock declined 22.91% in the same time frame, underscoring how quickly options can far outperform 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.

CIEN ended the session down 24.32% to $45.46. The network-technology company missed quarterly earnings expectations before the opening bell today.