$FREQ put buyers score overnight

Frequency Therapeutics (FREQ) shares charged lower today, and bearish option traders are making gains.

Only yesterday afternoon, Market Rebellion’s Unusual Activity Service identified the purchase of 3,000 April $10 puts for $0.35 as part of a bearish spread with shares at $34.66. This was clearly fresh buying, as open interest in the strike was only 213 contracts before the activity appeared.

Those puts traded for as much as $3.50 this session, 10 times their purchase price. The stock fell 71.15% in the same time frame, illustrating the kind of leverage that can be achieved quickly with 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.

FREQ was down 77.98% to close at $7.99. The biotechnology company reported that its latest FX-322 Phase a study did not demonstrate improvements in hearing measures against its placebo.