$LLY bulls double money

Bullish option traders scored huge profits today in Eli Lilly (LLY).

On Jan. 19, Market Rebellion’s Unusual Activity Service identified the purchase of 3,000 March $200 calls for $9.95 as part of a bullish spread with shares at $197.63. Open interest in the strike was a mere 980 contracts before the trade occurred, showing that this was a new position.

Those calls traded for as much as $20.00 today, more than 2 times their purchase price. The stock rose by as much as 10.31% in the same time frame, underscoring how quickly options can far outperform 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.

LLY opened sharply higher to a new high of $218.00 this morning but ended down 1.02% at $207.97. The pharmaceutical topped earnings estimates before the opening bell this this session.