Bulls score big with $AZN

Good news in AstraZeneca (AZN) drug testing is translating to speedy gains for upside option traders.

Just yesterday, May 27, Market Rebellion’s Unusual Activity programs found that 3,300 Weekly $53 calls expiring on June 5 were purchased for $0.70 to $0.95 with shares at $51.37. This was clearly a new position, as open interest in the strike was only 267 contracts before the activity appeared.

Those calls traded for up to $1.85 this morning, more than double their average purchase price. The stock rose 4.44% in the same time frame, underscoring the kind of leverage that can be obtained with options.

Long calls lock in the price where the 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.

AZN was up 1.96% today to close at $53.50. The pharmaceutical company said that it is testing one of its diabetes drugs, Farxiga, as a treatment for COVID-19.