$ABBV bulls triple their money

Option traders turned large gains in AbbVie overnight.

Just yesterday, Investitute’s market scanners identified the purchase of 2,000 May $102 calls for $0.90 to $1.11 as part of a bullish roll with shares at $98.93. This was clearly a new position, as open interest in the strike was only 234 contracts before the activity appeared.

Those calls traded up to $2.90 this morning, nearly 3 times their initial purchase price. The stock rose 4.3% at the same time, showing how quickly options can far outpace gains in 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.

ABBV jumped 5.72% to $102.07 today. The pharmaceutical company rallied after announcing a new stock-buyback program this morning.