Bulls ride $PFE to new highs

Option traders quadrupled their money in Pfizer today after a strong earnings report sent shares to historic levels.

On July 11, Investitute’s market scanners found that 1,300 Weekly $37.50 calls expiring on Aug. 24 were purchased for $0.51 to $0.53 as part of a bullish roll with shares at $37.20. Open interest in the strike was only 122 contracts before the trade occurred, showing that this was a new position.

Those calls traded as high as $2.47 today, more than 4.5 times their purchase prices. The stock rose 7.47% in the same time period, 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.

PFE closed the day up 3.47% to $39.93, just off an all-time-high of $39.99 printed earlier in the session. The drug and health-care products company beat quarterly estimates on the top and bottom lines this morning.