Upside option positions in Incyte surged today with promising data on its proposed cancer drugs.
Last Friday, Investitute’s tracking systems identified the purchase of 2,495 June $120 calls for $5.10 with shares at $114.93. Open interest in the strike was just 394 contracts before the trade occurred, showing that it was a new position.
Those calls traded up to $13.50 this morning, nearly tripling in value less than a week later. The stock rose less than 14 percent in the same period, underscoring the kind of leverage that can be achieved through 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.
INCY rose 6.9 percent today to close at $128.80. The immuno-oncology company surged after releasing positive results from trials of several cancer treatments, leading JP Morgan to reiterate its “overweight” rating on the name with a $149 target and BMO Capital to raise its price to $155 from $146.