$EXEL bulls post sixfold profits

Option traders racked up enormous gains on upside positions in Exelixis today.

On Oct. 29, Investitute’s market scanners identified the purchase of 10,000 February $16 calls for $1.35 as part of a bullish roll with shares at $14.22. Open interest in the strike was a mere 126 contracts before that session began, showing that it was a new position.

Those calls sold for $8.13 today, 6 times their purchase price. The stock soared 69.2% in the same time period, a huge move but still nowhere near that of its options 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.

EXEL jumped 5.21% to $24.05 today. The biotechnology company announced last night that the Food and Drug Administration has approved its Cabometix liver-cancer treatment.