Bears score huge win in $EXAS

Downside option traders nearly quintupled their money in Exact Sciences today.

On July 18, Investitute’s tracking systems showed that 5,000 Weekly $65 puts expiring tomorrow were purchased for $3 as part of a bearish spread with shares at $66.43. This was clearly a new position, as open interest in the strike was a mere 23 contracts before that session began.

Those puts traded up to $14.34 today, almost 5 times their purchase price. The stock plunged 23.71% in the same time frame, a large move but 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.

EXAS dropped 12.67% to $51.63 today. The medical-diagnostics company reported revenues that came in short of expectations after the market closed yesterday.