$IONS bears triple their money

Downside option positions racked up big gains as Ionis Pharmaceuticals dropped today.

Last Friday, Aug. 24, Investitute’s proprietary programs flagged the purchase of 2,000 September $51 puts for $2 as part of a bearish spread with shares at $51.66. Open interest in the strike was just 1 contract, showing that this was a new position.

Those puts were marked at $6.25 at the end of today’s session, more than 3 times their purchase price. The stock fell 12.56% in the same time frame, a large move but nowhere near 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.

IONS plunged 15.88% to $45.17 today. The pharmaceutical company fell sharply after the Food and Drug Administration refused to approve the firm’s Waylivra treatment for pancreatic inflammation.