Bulls double money in $KPTI

Karyopharm Therapeutics (KPTI) spiked higher today, turning large profits on upside option positions.

On June 24, Investitute’s proprietary programs flagged the purchase of 5,000 July $7.50 calls for $1.05 as part of a bullish spread with shares at $6.17. This was clearly a new position, as open interest in the strike was only 1,364 contracts before the activity appeared.

Those calls traded for as much as $2.40 today, more than twice their purchase price. The stock surged 48.62% in the same time frame, a huge move but still far 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.

KPTI is up 36.03% to $8.89 this afternoon as trading has been halted. The drug maker rallied on news of regulatory approval of selinexor, its treatment for multiple myeloma.