Place the octopus pieces into a large saucepan. Cover, and cook over medium-high heat until the octopus has released its juices, 10 to 15 minutes. Uncover, and continue simmering until the liquid has reduced to 3 to 4 tablespoons, 20 to 25 minutes.
Drizzle the octopus with olive oil, then stir in the onions and bay leaves. Cook and stir until the onions have softened, about 10 minutes. Add the tomatoes, salt, and pepper. Reduce heat to medium-low, cover, and simmer until the octopus is tender and the sauce has thickened, about 25 minutes. Cook uncovered for the last 10 minutes if the sauce is too thin.
