Clovis call buyers turn big profits

Option traders have doubled their money in bullish positions on Clovis Oncology.

On May 11, Investitute’s market scanners found that 2,000 July $55 calls were purchased for $6.03 as part of a bullish vertical spread. Shares traded for $46.46 at that time.

Today those calls traded for $15.50, more than doubling in value. The stock rose 35 percent in the same period, a large gain but nowhere near 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.

CLVS rallied 4.83 percent today to close at $62.99. Leerink Partners initiated coverage of the drug company today with an “outperform” rating and an $85 price target, citing its ovarian-cancer treatment and its potential as an acquisition target.