Call buyers win big with Exelixis

It took less than a week for bullish traders to collect huge winnings in Exelixis options.

Last Friday, Investitute’s systems identified the purchase of 2,600 July $22 calls bought for $0.35 to $0.40 with shares at $19.10. This was clearly fresh buying, as open interest in the strike was just 316 contracts before that session began.

Those calls traded as high as $2.80 this morning, a profit of about 650 percent. The stock rose 27.6 percent in the same time frame, a large gain but nothing compared to that of the options.

Long calls lock in the price where the 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.

EXEL surged 7.81 percent today to close at $24.02. The drug maker has been rallying steadily this week since announcing positive results in clinical trials for its proposed kidney treatment Cabosun.