Bulls double money in $ARRY

Array BioPharma (ARRY) has rallied sharply in the last month, yielding large gains on upside option positions.

On Feb. 6, Investitute’s market scanners flagged the purchase of 2,000 June $25 calls for $1.40 to $1.45 above open interest of 52 contracts with shares at $20.69. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Fast Money” program in choosing the name his final trade.

Those calls sold for as much as $3.52 today, about 2.5 times their purchase prices. The stock surged 37.12% in the same time period, a large move but still well 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.

ARRY was up 1.67% to $28.59 today. The stock surged after the oncology-drug company reported positive results from clinical trials of its colon-cancer treatment on May 21.