Bulls rack up profits in $AXSM

Option traders more than tripled their money on upside positions in Axsome Therapeutics today.

On March 6, Investitute’s market scanners identified the purchase of 5,000 18April $12.50 calls in one print for $1.20 with shares at $8.61. This was clearly a new position, as open interest in the strike was only 703 contracts before the trade occurred.

Those calls sold for $4.10 just before today’s closing bell, about 3.5 times their purchase price. The stock rose rocketed 89.43% 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.

AXSM spiked higher by 25.69% to $16.34 today. On March 21, Cantor Fitzgerald raised its price target on the biopharmaceutical company to $25 from $16.