$MRK call buyers post big profits

Bullish option traders have more than doubled their money in Merck.

On May 4, Investitute’s market scanners found that 2,500 Weekly $60.50 calls expiring this afternoon were purchased for $0.53 and $0.54 with sharest at $57.69. There was no open interest the strike before the trade occurred, showing that it was a new position.

Those calls sold for $1.32 today, about 2.5 times their purchase prices. The stock rose 7.18% in the same time period, illustrating the kind of leverage that can be achieved 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 0.47% today to close at $61.47. The pharmaceutical giant has outperformed its sector with new cancer treatments.