$AXSM put prices rise 6-fold

Option traders have turned large profits on downside positions in Axsome Therapeutics (AXSM).

on Jul. 20, Market Rebellion’s Unusual Activity programs detected the the purchase of 4,500 September $42.50 puts for $2.60 as part of a bearish spread with shares at $55.60. Volume was clearly above the previous open interest of 3 contracts, indicating that this was a new position.

Those puts traded for as much as $16.50 this session, more than 6 times their purchase price. The stock fell 50.54% in the same time frame, a huge move but nothing like that of its options.

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.

AXSM posted a new 52-Weekk low of $27.30 this session and closed at $27.37, down 46.5% on the day. The drug maker reported earnings in the pre-market today.