Traders win both ways in $VIAB

Bearish option traders reaped large profits in Viacom last week, but today it was the bulls who scored big money.

On March 21, Investitute’s market scanners identified the purchase of 2,000 18April $26 calls in one print for $1.15 with shares at $25.82. This was clearly a new position, as open interest in the strike was a mere 27 contracts before that session began.

Those calls traded for as much as $3.33 today, about 3 times their purchase price. The stock rose 13.13% in the same time frame, showing how quickly options can far outpace gains in their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

VIAB jumped 7.64% to $28.33 today. The cable network fell during a contract dispute with AT&T last week, resulting in substantial gains for downside option positions, but shares rebounded after the company reached a deal and reaffirmed its outlook.