$GILD bulls double their money overnight

It took only one night for bullish option traders to rack up healthy gains on longer-term upside positions in Gilead Sciences (GILD)

Just yesterday, Market Rebellion’s Unusual Activity Service found that 7,500 August $80 calls were bought for $5.85 to $6.70 with shares at $74.65. This was clearly fresh buying, as open interest in the strike was only 6241 contracts before that session began.

Those calls traded for as much as $12.50 today, more than 2 times their purchase prices. The stock rose 14.49% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

GILD ended the session up 9.73% to $83.99 this afternoon. The pharmaceutical giant rallied on reports of potential progress on its remdesivir drug to treat the coronavirus.