Bulls double money in $BIIB

Option traders are making huge profits in Biogen (BIIB) today.

On Jan. 14, our Unusual Activity Service detected the purchase of 2,000 February $295 calls for $15.20 as part of a bullish spread with shares at $292.67. This was clearly new positioning, as volume was far above the strike’s previous open interest of 103 contracts.

Market Rebellion co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls have traded for as much as $30.81 so far this afternoon, more than twice their purchase price. The stock rose 11% in the same time period, showing 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.

BIIB has spiked higher in the last half hour of trade, currently at $327.77 or up 15.54% on the session. The biotechnology company won a challenge by Mylan (MYL) regarding the validity of a patent on its multiple sclerosis drug Tecfidera.