Here's how I did it. I tested in 2.4 and 2.5. Initially, I thought it wasn’t possible. But I experimented a little and it looks like you can.
- Go to: Gradebook > Categories and items > add a grade item
- In the settings, set the Max grade to 0
- Set the minimum grade to the max negative amount you'd want to penalize. I used "-100" for example
- In the Grader report, enter the negative points you want to penalize the student for.