$VIAB bears quadruple money

It took less than a week for downside option positions in Viacom to yield exponential gains.

On March 14, Investitute’s proprietary programs flagged bearish option activity in two strikes:

–20,000 18April $25 puts were bought at the same time for $0.20 to $0.23 above open interest of 173 contracts. Those puts traded up to $0.83 this afternoon, about 4 times their average purchase price.

–7,500 18April $27.50 puts were purchased for $0.50 to $0.55 above open interest of 913 contracts. Those options sold for as much as $2.02 today, also about 4 times their entry prices.

The stock respectively fell 8.73% and 9.29% from the time of those trades, underscoring 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.

VIAB was down 5.49% to $26.01 today. Last night the cable network warned DirecTV subscribers that they may lose access to channels including Nickelodeon, MTV, BET, and Comedy Central unless a new programming agreement is reached by midnight March 22.