$CELG calls triple in three days

Option traders who opened the week with bullish positions in Celgene were already posting big gains today.

On Oct. 1, Investitute co-founder Jon Najarian told subscribers that 3,600 Weekly $92 calls expiring this Friday were purchased for $0.44 to $0.74 with shares at $90.10. This was clearly fresh buying, as open interest in the strike was only 347 contracts before the activity appeared.

Those calls traded up to $1.35 today, 3 times their initial purchase price. The stock rose 0.58% in the same time frame, illustrating the kind of leverage that quickly 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.

CELG climbed to $92.68 this morning before pulling back to close at $91.87, up 0.01% on the session. Cantor Fitzgerald began coverage of the drug maker with an “overweight” rating and a $100 price target on Monday, when the Weekly $92 calls were bought.