$IMGN puts jump threefold

Bearish option traders have posted exponential gains with the recent drop in ImmunoGen.

On Feb. 27, Investitute’s proprietary programs flagged the purchase of 8,000 March $4 puts for $0.25 to $0.50 with shares at $5.68. Volume was well above the strike’s previous open interest of 5,280 contracts, indicating that this was fresh buying.

Those puts sold for $1.10 today, about 3 times their average purchase price. The stock plunged 49.12% in the same time frame, 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.

IMGN was down 1.82% to $2.69 today. The drug maker announced on March 1 that the Phase 3 trial of its ovarian cancer treatment had failed to meet its survival goals.