$QCOM bears turn quick gains

It took less than a week for option traders to triple their money on downside positions in Qualcomm.

On Nov. 5, Investitute’s proprietary programs flagged the purchase of 3,000 November $60 puts for $1.38. The trade was part of a bearish spread with shares at $62.87.

Those puts traded up to $4.64 this afternoon, more than 3 times their purchase price. The stock fell 7.17% in the same time frame, showing 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.

QCOM dropped 8.16% to $58.05 today. The chip maker’s shares declined on weak guidance issued by the company after the market closed yesterday.