Investor triples money in Amicus

Amicus Therapeutics has seen its stock more than double this year, and a highly bullish option strategy is reaping exponential returns.

On March 3, Investitute’s tracking systems detected the purchase of 2,500 July $8 calls for $1.05 and the sale of 2,500 July $5 puts for $0.30 in a bullish combination. The net cost of the trade was $0.75 with shares at $7.33.

Today those calls traded for $2.75 while the puts were listed for $0.05, representing a net gain of 260 percent. The stock rose 46.8 percent in the same time, showing how options can provide significant leverage.

Such combination trades are especially bullish because a rally boosts the price of the long calls while decreasing the value of the puts that were sold. Calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares with limited risk. The sale of the puts reduces the overall cost of the strategy but obligates the trader to sell shares at a certain price if they fall.

FOLD was up 2.43 percent today to close at $10.54. The biotechnology company, which began the year trading at $5, hit a 52-week high of $10.77 earlier in the session.