Call buyers find gains in $AZN

Good news surrounding AstraZeneca’s (AZN) COVID-19 vaccine is translating to big gains for upside option traders.

On Apr. 15, Market Rebellion’s Unusual Activity Service found that 8,000 September $55 calls were bought for $1.57 to $1.65 with shares at $50.90. This was clearly fresh buying, as open interest in the strike was just 4,111 contracts before the activity appeared.

Those calls have traded for up to $4.35 today, more than 2.5 times their purchase prices. The stock rose 13.2% 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 last higher by 0.25% today at $57.54. The pharmaceutical company’s  COVID-19 vaccine was authorized for emergency use in Japan on Friday.