$CLVS bulls claim their profits

Bullish option traders posted solid gains on upside positions opened in Clovis Oncology a little over a month ago.

On Oct. 31, Investitute’s market scanners identified the purchase of 2,500 January $16 calls from $1.25 to $1.40 with shares at $12.39. Volume was well above the strike’s open interest of 20 contracts, showing that this was a new position.

Those calls traded for as much as $6.90 today, better than 5 times their purchase prices. The stock has rallied, and nearly doubled, with a 79.74% in the same time frame – a gigantic move but still nowhere near that of its options on a relative basis. It was the second winning trade on CLVS calls found by Investitute’s market scanners this quarter.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

CLVS gapped higher this morning to an intraday high of $22.88 before pulling back with the rest of the market to settle at $19.99, up 4.5% on the day. The oncology company jumped as peer Tesaro (TSRO) was acquired for a hefty premium yesterday, and followed up today with news that the European Patent Office upheld claims for its drug, Rubraca, driving Leerink to raised its price target on the stock to $40, from $22.