$BSX calls skyrocket 45-fold

Boston Scientific surged on takeover speculation today, turning astronomic profits for upside option positions.

On May 18, Investitute’s market scanners identified the purchase of 2,200 June $32 calls for $0.10 to $0.14 with shares at $30.45. Volume was double the strike’s open interest of 1,081 contracts, indicating that this was fresh buying. This afternoon on CNBC’s “Halftime Report,” Investitute co-founder Jon Najarian mentioned that BSX has seen repeated unusual activity recently.

Those calls traded for as much as $4.50 this morning, 45 times their initial purchase price. The stock rose 16% in the same time, frame, 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.

BSX jumped 7.42% to close at $34.32 today, after reaching a 52-week high of $37.30 earlier in session. The medical-device manufacturer rallied sharply on news reports that Stryker may launch a bid for the company.