$WBD option bears double money

Bearish option traders are scoring a quick win in downside positions on Warner Bros Discovery Inc (WBD) today.

On Jun. 6, Market Rebellion’s Unusual Option Activity Service found that 2,800 Weekly $17 puts, expiring tomorrow, were bought for $0.30 to $0.43 with shares at $17.34. This was clearly fresh buying, as open interest in the contract was just 783 before the activity appeared.

Those puts have sold for as much as $1.01 today, more than 2 times their purchase prices. The stock fell 7.67% in the same time frame, showing how quickly 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.

WBD is currently lower by 3.86% at $16.03.