Option traders are posting exponential gains in AbbVie on upside positions opened just one week ago.
On Sept. 21, Investitute’s tracking systems detected the purchase of 6,900 October $91 calls for $0.46 to $0.53 with shares at $87.08. Open interest in the strike was only 13 before the trades occurred, showing that this was fresh buying.
Today those calls traded as high as $2.03, quadrupling in value after five sessions. The stock rose less than 4.2 percent at the same time, underscoring the kind of leverage that can be achieved through options.
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.
ABBV jumped 4.97 percent today to close at $88.96. Under a settlement with Amgen, the pharmaceutical company said this morning that it was free to launch a drug that would rival best-selling Humira by the end of 2023.