Bulls double money in $GILD

Option traders rang the register on fast profits in Gilead Sciences (GILD) today.

Just last Thursday, on Jan. 30, our Unusual Activity Service detected the purchase of 2,500 February $62.50 calls for $2.43 to $2.60 with shares at $64.05. This was clearly new positioning, as volume was far above the strike’s previous open interest of 1,229 contracts.

Those calls have traded for as much as $6.20 today, more than twice their purchase prices. The stock rose 6.48% 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 $68.68 this morning before pulling back, currently at $66.47 or up 5.13% on the session. The drug company is scheduled to announce quarterly results after the market closes on Feb. 4.