Options Traders Respond as VIAC Extends Dramatic Dip

The equity has tumbled more than 30% over the last two days

Deputy Editor
Mar 25, 2021 at 10:52 AM
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After recently announcing the pricing of its $3 billion new stock offering, the shares of CBS Corporation (NASDAQ:VIAC) took a devastating tumble. In fact, over the last two sessions, the equity has fallen more than 30%, and things don't seem to be slowing down today. At last check, VIAC is down 3%, last seen trading at $67.97.

The security's plunge comes just days after hitting a record closing high of $100.42 on March 22. Now, CBS stock is sitting back below its 40-day moving average, which helped contain some of yesterday's plummet, for the first time since October. Still, VIAC boasts an impressive 78.2% year-to-date lead.  

The options pits are abuzz with pessimism too, as puts are all the rage. This is per the security's 10-day put/call volume ratio of 4.48 International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all other readings from the past year. This means puts are being picked up at a much quicker-than-usual pace. Echoing this, VIAC's Schaeffer's put/call open interest ratio (SOIR) of 3.43 sits in the 96th percentile of its annual range. In other words, short-term options traders have rarely been more put-biased.

Today's options pits are seeing an unusual amount of volume from both sides of the aisle. Already, over 14,000 calls and 35,000 puts have exchanged hands, which is double the volume typically seen at this point. Most popular is the April 67.50 put, followed by the 57.50 put from the same series, with new positions being opened at the latter.

For those wanting to speculate on the equity's next move, CBS stock options can be had at a bargain at the moment. VIAC's Schaeffer's Volatility Index (SVI) of 78% sits higher than only 11% of all other readings from the past year. This means options players are pricing in lower-than-usual volatility expectations right now. What's more, the stock's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 81 out of 100, indicating the security has exceeded volatility expectations during the past year -- a boon for premium buyers.

 

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