$AXSM bulls double their money

Option traders have turned large profits on upside positions in Axsome Therapeutics.

On April 1, Investitute’s tracking systems detected the purchase of 5,000 July $15 calls for $3.60 as part of a bullish spread with shares at $13.26. This was clearly a new position, as open interest in the strike was a mere 15 contracts before that session began.

Those calls traded for $8.61 just before today’s closing bell, nearly 2.5 times their purchase price. The stock rocketed 73.6% in the same time period, a huge move but still well below that of their options on a relative basis.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

AXSM posted an all-time high of $23.27 in midday trading and closed at $23 even, up 5.8% on the session. The drug maker rallied last week after announcing that the Food and Drug Administration has granted “breakthrough” status to the company’s treatment for depression.