Bulls triple their money in $AGN

Patience has paid off for traders who held onto upside options in Allergan.

On March 1, Investitute’s proprietary programs flagged the purchase of 3,600 August $170 calls for $5.02 as part of a bullish spread with shares at $147.15. This was clearly a new position, as open interest in the strike was only 142 contracts before the trade occurred.

Those calls sold for $14.30 this morning, about 3 times their purchase price. The stock rose 25.25% in the same time period, a large move but nowhere near that of its 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.

AGN was up 0.24% to $184.21. The drug maker rallied sharply in early June on reports that Carl Icahn was building a stake in the company and rose again after strong quarterly results on July 26 and has held most of its gains despite recent market volatility.