$AMRN call prices rocket 12-fold

Amarin shares soared on positive clinical developments today, but bullish option positions in the name rose much farther.

On Aug. 27, Investitute’s proprietary programs found that 4,000 Weekly $4.50 calls expiring on Oct. 5 were purchased for $0.58 to $0.65 with shares at $2.87. There was no open interest in the strike before that session began, showing that this was fresh buying.

Those calls traded for $7.92 today, more than 12 times their purchase prices. The stock surged more than fourfold in the same time frame, a huge move but still far below that of its options on a relative basis.

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.

AMRN rocketed 314.72% to $12.40 today. Shares soared this morning after the biopharmaceutical company said its Vascepa cholesterol treatment significantly reduced heart problems in tests.