$MRK bulls double their money

Option traders have turned big gains in Merck as shares hit new highs.

On Nov. 19, Investitute’s market scanners identified the purchase of 10,000 January $77.50 calls in one print for $1.36 as part of a bullish spread with shares at $76.11. Volume was above the strike’s open interest of 9,046 contracts, indicating that this was a new position.

Those calls traded for $3 just before the closing bell, more than twice their purchase price. The stock rose 4.39% at the same time, illustrating the kind of leverage that can be achieved quickly with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

MRK was up 1.84% to $79.34 today. The drug giant climbed to $79.49 in the final minutes of trading this afternoon, its highest price in more than 17 years.