Bulls get another boost with Clovis

Clovis Oncology already paid big gains on a winning trade posted earlier this month, but those returns have increased exponentially with new developments this week.

On May 11, Investitute’s proprietary programs identified the purchase of 2,000 July $55 calls for $6.03 as part of a bullish vertical spread with shares at $46.46. This was clearly a new position, as open interest in the strike was only 556 contracts before the trade occurred.

Today those calls traded for $41.80, a gain of some 600 percent. The stock price has doubled in the same period, but even that huge move pales in comparison to that of the 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.

CLVS fell 1.84 percent to $95, pulling back from a 52-week high of $96.92 posted just before yesterday’s close. It was the first down session for the stock since gapping up from below $60 on Monday with positive clinical-trial results on proposed Rucaparib treatment for ovarian cancer.