$I put prices skyrocket 6-fold

Bearish option traders are logging exponential gains in Intelsat (I) today.

On Oct. 17, Market Rebellion’s proprietary programs flagged the purchase of 5,000 November $24 puts for $1.40 as part of a bearish roll with shares at $26.42. Open interest in the strike was only 879 contracts before the trade occurred, showing that this was a new position.

Those puts were marked at $8.75 today, more than 6 times their purchase price. The stock plummeted 42% in the same time period, a huge move but still nowhere near that of its options on a relative basis.

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.

I is down 25.11% to $15.27 this morning. JP Morgan downgraded the satellite operator to “neutral” from “overweight” and cut its price target to $22 from $34 before the market opened today.