$ESPR call prices surge 4-fold

Option traders have posted exponential gains on bullish positions in Esperion Therapeutics.

On April 15, Investitute’s tracking systems detected the purchase of 2,000 May $45 calls for $1.16 to $1.40 as part of a bullish spread with shares at $41. This was clearly a new position, as open interest in the strike was only 105 contracts before that session began.

Those calls traded for as much as $5.30 today, more than 4 times their average purchase price. The stock rose 20.29% in the same time frame, underscoring how options can far outperform their underlying shares on a relative basis.

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.

ESPR was up 0.31% to $48.39 today. The drug company rallied after announcing yesterday that the Food and Drug Administration has accepted applications proposing two treatments for elevated lipoprotein cholesterol.