Option traders began the week with big gains in MannKind, but that was just the beginning of a massive run higher.
On Wednesday, Investitute’s market scanners detected the purchase of 5,300 October $3 calls for $0.36 to $0.65 with shares at $3.45. Volume was well above the strike’s open interest of 1,531 showing that this was fresh buying.
Those calls traded for $2.70 this morning, gaining more than 7 times their original purchase price in less than three full sessions. The stock soared 66.1 percent at the same time, a huge move but one that was still far below that of its options. It was the second winning call trade in MannKind posted on Investitute this week.
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.K
MNKD rose 1.41 percent today to close at $5.03. Shares have been rallying sharply since Monday, when the Food and Drug Administration updated prescription information to include specific timing of the effects of MannKind’s inhaled-insulin product Afrezza.