$NKTR bulls post exponential gains

Option traders have more than quadrupled their money in Nektar Therapeutics.

On Oct. 6, Investitutes market scanners identified the purchase of 1,500 November $28 calls for $0.90 as part of a bullish spread with shares at $24.53. This was clearly a new position, as open interest in the strike was only 509 contracts before the trade occurred.

Those calls traded up to $4.06 this afternoon, 4.5 times their purchase price. The stock rallied 28.7 percent in the same time frame, a huge move but still nowhere near that of its options on a relative basis.

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.

NKTR surged 12.89 percent to $30.30 today. The drug developer surpassed earnings and sales forecasts after the market closed yesterday.