Media giant Viacom CBS (VIAC) saw shares drop nearly two-thirds during the pandemic. Now largely recovered, at least one trader is betting on a renewed decline.
That’s based on the March 2021 $35 puts. Nearly 14,000 contracts traded against a prior open interest of 254, for a 54-fold rise in volume. The options are also about $3 in-the-money, given the current share price of $32. The option buyer paid about $5.15 per contract.
Shares of the company have been trading for less than a year, following the merger of Viacom and CBS. Even with that limited trading history, the company trades at about 7 times forward earnings, and just under its price to sales.
- The Biggest Income Secret of 2021
Let’s face it: Things are different right now.
We can’t do all of the things we’re used to doing. But not everything has been affected…
One of the most powerful ways to make extra cash still works straight from your house — and can score you instant upfront payouts of $500… $1,500… even over $3,000 each weekday.
Action to take: It’s hard to see a significant downside in shares here. The in-the-money put sale should move higher dollar for dollar with a drop in shares, but that upside is limited. Traders would be better selling a put option to buy shares at a lower price, or buying a call option to play the long-term trend.
For put sellers, the March $28 puts are unlikely to be exercised, and can put about $1.95, or $195 per contract, into trader’s pockets.
For call buyers playing the long-term uptrend, the March $35 calls, trading for about $1.90 each, could deliver mid-to-high double-digit returns.