$GILD traders triple their money

Gilead Sciences rallied on positive data today, handing substantial gains to upside option positions.

On Nov. 28, Investitute’s market scanners identified the purchase of 7,700 December $73.50 calls for $0.80 to $0.95 with shares at $72.58. These were clearly new positions, as open interest in the strike was only 269 contracts before the trades occurred..

Those calls sold for $2.71 today, more than 3 times their original purchase price. The stock rose less than 5 percent in the same time frame, showing how options can far outpace gains in 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.

GILD was up 2.24 percent today to close at $75.88. The drug company delivered positive updates on oncology therapies at the American Society of Hematology’s annual meeting.