It's been a wild ride for Pandora investors.
Shares of the streaming giant fell more than 4 percent Tuesday and are now down 25 percent from their 52-week highs. Despite the sharp move, the stock has rallied more than 7 percent in the last week amid favorable developments regarding royalty payments. But some traders are sensing more pain to come, and they are betting aggressively against the stock.
On Monday, when options put volume ran more than 13 times its daily average, one trader bet $5.4 million that Pandora shares will plummet into the end of the year. Specifically, that trader purchased 20,000 of the January 20-strike puts for $2.70 each. Since each contract accounts for 100 shares of stock, and buying a put option allows for a trader to sell a stock at a set price at a given time, this trade is profitable if Pandora falls below $17.30, or roughly 13 percent lower, by January expiration.