$CLVS bears claim their profits

Bearish option traders posted solid gains on downside positions opened in Clovis Oncology (CLVS) at the start of this week.

On Monday, Aug. 5, Investitute’s market scanners identified the purchase of 5,000 August $8 puts from $0.30 to $0.35 with shares at $8.84. Volume was well above the strike’s open interest of 275 contracts, showing that this was a new position.

Those puts have traded for as much as $0.98 today, or about 3 times their average purchase prices. The stock has fallen 18.89% in the same time frame – a gigantic 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.

CLVS is currently trading at $6.96, 22.41% lower on the day. The oncology company missed earnings expectations on August 1.