$GLW bears quadruple money

Option traders collected large profits on downside positions in Corning (GLW) as shares dropped today.

On July 25, Market Rebellion’s proprietary programs flagged the purchase of 6,000 September $33 puts for $1.23 to $1.47 with shares at $33.01. This was clearly fresh buying, as volume in the strike was only 385 contracts before the trades occurred.

Those puts sold for $5.40 this morning, 4 times their average purchase price. The stock fell 14.48% in the same time period, showing how options can far outperform moves in their underlying shares on a relative basis.

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.

GLW closed today down 6.06% to $28.23. The glass-display maker reduced its outlook after the market closed yesterday.