$MDCO bulls double money

Option traders rang up large profits on upside positions in Medicines Company (MDCO) today.

On April 25, Our proprietary programs cited the purchase of 2,240 October $32 calls for $7.30 as part of a bullish spread with shares at $29.65. This was clearly a new position, as open interest in the strike was a mere 32 contracts before that trade occurred.

Those calls sold for $15.50 today, more than twice their purchase price the stock surged 58.25% in the same time period, a large gain but still well below 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.

$MDCO is up 13.16% to $47.48 in late-day trading. The biopharmaceutical company rallied on positive results for its cholesterol therapy this morning.