Bulls double money in $EW

Option traders cashed in large profits on upside positions in Edwards Lifesciences today.

On Feb. 7, Investitute’s market scanners identified the purchase of 4,800 18April $180 calls for $5.50 as part of a bullish spread with shares at $169.24. This was clearly a new position, as open interest in the strike was only 80 contracts before the trade occurred.

Those calls sold for $12.25 today, more than twice their purchase price. The stock rose 12.86% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

EW climbed to $192.93 early this morning before pulling back to close at $188.99, down 1.64% on the session. The heart-device maker recently reported positive Phase 3 clinical-trial results for its transcatheter aortic valve replacement. BMO Capital raised its price target on the name to $204 from $190 this morning, following Canaccord Genuity lifting its target to $215 from $190 earlier in the week.