Bulls post fast profits in $NVS

Option traders nearly doubled their money on upside positions in Novartis (NVS) today.

On July 5, Investitute’s market scanners identified the purchase of 4,000 October $92.50 calls for $2.57 as part of a bullish roll with shares at $90.57. Open interest in the strike was only 174 contracts before the trade occurred, showing that this was a new position.

Those calls sold for as much as $4.80 this morning, almost twice their purchase price. The stock rose 4.64% in the same time frame, 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.

NVS is up 3.8% to $93.66 this afternoon. The drug maker surpassed quarterly expectations and raised its outlook this morning.