$OPK bulls double their money

Option traders posted large gains in Opko Health as the pharmaceutical industry rallied today.

On June 5, Investitute’s proprietary programs found that 5,000 Weekly $4.50 calls expiring this Friday were purchased for $0.30 as part of a bullish roll with shares at $4.21. This was clearly a new position, as open interest in the strike was a mere 10 contracts before the trade occurred.

Those calls sold for $0.80 today, more than 2.5 times their purchase price. The stock surged 26.1% in the same time period, showing how 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.

OPK jumped 5.95% to $5.52 today. The pharmaceuticals and diagnostics company rose along with other names in the sector.