$AMGN calls rocket 9-fold

Option traders have run up huge gains on bullish contracts in Amgen (AMGN) that expire this week.

On July 31, Our tracking systems showed that 4,120 Weekly $190 calls expiring this Friday were bought for $2.05 as part of a bullish roll with shrea at $197.50. This is clearly a new position, as open interest in the strike was a mere 26 contracts before that session began.

Those calls traded for $18.60 today, 9 times their purchase price. The stock rose 5.53% in the same time period, underscoring how 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.

AMGN reached $208.95 this morning but pulled back with the broader market to trade at $205.86, still up 0.22% on the session. The pharmaceutical company received multiple analyst upgrades today after buying the rights to psoriasis drug Otezla from Celgene (CELG) for $13.4 billion.