$ARQL bulls keep on winning

Bulls who opened upside option positions in ArQule (ARQL) yesterday morning are already reaping exponential profits.

Yesterday on Dec. 10, Market Rebellion’s Unusual Activity Service detected the purchase of 13,800 January $20 calls for $0.15 and $0.25 with shares at $19.83. This was clearly fresh buying, as there was no open interest in the contract before that session began.

Those calls have traded for as much as $0.80 so far this session, 4 times their average purchase price. The stock rose 2.77% in the same period, underscoring how quickly options can far outperform their underlying shares.

It is the second winning trade in the name to be posted on Market Rebellion this week.

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.

ARQL is up 2.03% to $20.36 in midday trading. The cancer drug developer, which announced it would be acquired by Merck (MRK) for $20 per share, has continued to trade higher over the past two sessions.