$MYL calls prices double

Option traders who opened bullish positions in Mylan (MYL) on two separate occasions were reaping significant profits this morning.

On July 9, Investitute’s market scanners identified the purchase of 2,000 Weekly $21 calls for $0.60 to $0.70 with shares at $19.58. This was clearly fresh buying, volume was far above the strike’s previous open interest of 97 contracts.

And again on July 24, Investitute’s market scanners found more buying, 6,000 of those same 02August $21 calls for $0.50 to $0.60, as part of a bullish roll, with shares at $18.78. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $1.49 this morning, more than 2 times their average purchase prices. The stock rose as much as 11.55% at the same time, underscoring how quickly options can far outpace gains in 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.

MYL is currently up 13.57% on the day at $20.96. The drug maker rose sharply this morning on news that it and Pfizer (PFE) reached an agreement to combine the former with the latter’s Upjohn.