Bulls double their money in $GILD

Option traders to turned large profits today on upside positions opened in Gilead Sciences only a few sessions ago.

On Jan. 2, Investitute’s market scanners flagged the purchase of 2,300 March $65 calls for $3.15 with shares at $63.34. This was clearly fresh buying, as open interest in the strike was only 329 contracts before that session began.

Those calls traded for $5.95 this afternoon, nearly twice their purchase price. The stock rose 7.91% in the same time frame, illustrating the kind of leverage that can be achieved quickly with options. Investitute co-founder Pete Najarian cited the unusual activity in choosing GILD as his final trade on CNBC’s “Halftime Report” yesterday.

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.

GILD was up 4.6% to $68.25 today. Oppenheimer upgraded the drug maker to “outperform” from “perform” with an $85 price target the morning after the call buying occurred. Gilead also rallied on news that rival Celgene was being acquired by Bristol-Myers Squibb for $74 billion.