$EXEL calls triple overnight

Option traders posted substantial profits today on upside positions in Exelixis (EXEL) opened only one session earlier.

Just yesterday, Our proprietary programs cited the purchase of 3,000 September $22 calls $0.34 to $0.40 with shares at $20. Volume was above the strike’s previous open interest, indicating that this was fresh buying.

Those calls traded up to $1 today, about 3 times their initial purchase price. The stock rose 6.1% at the same time, underscoring how quickly options can far outpace gains in their underlying shares.

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 is up 6.52% to $21.24 in afternoon trading. The biotechnology company today amid speculation that some kind of deal may be in the works.