$AMRN calls rocket fourfold

Bullish option traders rang up more profits in Amarin today.

On Jan. 10, Investitute’s tracking systems found that 1,800 February $20 calls were purchased for $0.29 to $0.47 with shares at $16.25. Volume was well above the strike’s previous open interest of 774 contracts, indicating that this was fresh buying. Investitute co-founder Pete Najarian cited unusual activity in the name on CNBC’s “Halftime Report” yesterday and made AMRN his final trade on “Fast Money” last night.

Those calls traded for $1.36 this morning, more than 4.5 times their initial purchase price. The stock rose 8.8% in the same time frame, underscoring the kind how options can far outperform their underlying shares. It was the second winning trade in AMRN posted on Investitute in the last two weeks.

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 was up 0.11% today to close at $17.73. The biopharmaceutical company has rallied sharply in recent weeks amid optimism over higher sales.