Lexicon bulls draw large returns

Upside option traders have doubled their money in Lexicon Pharmaceuticals thanks to successful data.

On June 7, Investitute’s market scanners detected the purchase of 3,000 July $15 calls in one print for $1.45 with shares at $14.93. Volume was above the strike’s open interest of 2,450 contracts, showing that this was a new position.

Today those calls traded for $3.03, more than doubling in value. The stock rose 19.2 percent in that time, illustrating how options can outperform 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.

LXRX ended today’s session off 1.45 percent to $17.62. The drug maker has been moving higher since June 9, when it announced positive trial results for its diabetes pill.