Bulls double money in $ARRY

Option traders turned quick gains in Array BioPharma today.

On Feb. 4, Investitute’s tracking systems detected the purchase of 5,000 June $20 calls for $2.45 as part of a bullish roll with shares at $18.49. Open interest in the strike was only 640 contracts before the trade occurred, showing that this was a new position. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report,” the day before Array was to announce quarterly results.

Those calls traded for as much as $5.80 today, more than twice their purchase price. The stock rose 22.07% in the same time frame, a large move but nowhere near 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.

ARRY surged to a 52-week high of $22.80 this morning before pulling back with the broader market to close at $21.56, still up 1.27% on the session. The oncology-drug company topped earnings and revenue estimates on Feb. 5 before the market opened.