$SRPT bears score big

Option traders are posting big gains on downside positions opened in Sarepta Therapeutics (SRPT) today.

On Dec. 15, Market Rebllion’s Unusual Activity programs found that 2,640 January $140 puts were bought for $10.50 as part of a bearish spread with shares at $167.33. This was clearly a new position, as open interest in the strike was a mere 245 contracts before that session began.

Those puts traded up to $58.00 today, more than 5 times their purchase price. The stock fell 50.8% 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.

SRPT closed down by 51.29% at $82.29. The drug maker missed its primary functional endpoints during its Phase 2 trial of SRP-9001-102.