A student suggested the following option strategy to make money Buy put options on a firm that just announced bad news thereby enabling them to profit when the stock price declines. Comment on the student's strategy?

The strategy is viable, but the investor would have to be logged into his/her brokerage account ready to execute the put option following the announcement.

Buying put options is a high risk transaction and should not be used for such speculative purposes

It's not a viable strategy since dissemination of such information is instantaneousThe stock would have already declined by the time the put option is executed since the market would have already impounded the bad news

The strategy is viable since benefiting from such information is consistent with the semi-strong form of market efficiencywhich is how active managers add value .

The strategy is not viable since the proper way to benefit from the news would be to buy call options on the stock rather than put options.