Bulls double money in $GILD

Option traders rang the register on profits in Gilead Sciences today.

On March 26, Investitute’s market scanners identified the purchase of 2,700 18April $67 calls for $0.51 to $0.54 with shares at $64.19. This was clearly fresh buying, as open interest in the strike was only 105 contracts before the activity appeared.

Those calls sold for as much as $1.15 today, more than twice their purchase prices. The stock rose 4.83% 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.

GILD spiked to $67.62 this morning before pulling back to close at $66.09, down 1.91% on the session. The drug company, which has rebounded since trading below $62 in early March, is scheduled to announce quarterly results after the market closes on May 2.