The $2.5 million bearish bet on Valeant

Valeant shares are down nearly 70 percent this year, and according to one big trader the pain is far from over.

On Thursday, when bearish trades outpaced bullish ones, this trader bet more than $2 million that the beleaguered drugmaker's shares could tumble another 10 percent in the next month.

The trader purchased 40,000 May 6 30.5/27.5 strike put spreads for 60 cents each. Since each put option accounts for 100 shares, this is a $2.5 million bet that Valeant will fall below $29.60 by the May expiration.

"That was actually an adjustment from a previous bearish bet," Optimize Advisors co-founder Mike Khouw said Thursday on CNBC's "Fast Money."

The battleground stock has been under pressure due to a string of bad news. On Thursday, Standard & Poor's lowered Valeant's rating to a "B" from a "B-plus," sending shares down more than 2 percent.

Analysts' estimates show an average price target of $59.27, with an underweight rating, according to FactSet.

Shares were trading slightly higher Friday at $32.46 a share. They were down about 3 percent on the week.

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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