$GILD call prices triple in days

It took only a few sessions bullish option traders to rack up exponential gains on upside positions in Gilead Sciences (GILD)

On Feb. 21, Market Rebellion’s Unusual Activity Service found that 6,500 Weekly $70 calls expiring on March 6 were bought for $1.28 to $1.77 with shares at $69.14. This was clearly fresh buying, as open interest in the strike was only 1,174 contracts before that session began.

Those calls have traded for as much as $5 so far today, more than 3 times their average purchase price. The stock rose 7.35% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

It is the third winning trade in the name posted on Market Rebellion in as many days.

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.

GILD is up 5.15% to $73.71 this afternoon. The pharmaceutical giant has rallied on reports of potential progress on drugs to combat the coronavirus.