Puma Biotechnology soared on positive drug data, and option traders reaped expoential gains.
On April 17, Investitute’s tracking systems detected the purchase of 2,400 June $45 calls for $5.00 to $5.50 with shares at $36.25. This was clearly fresh buying, as open interest in the strike was only 333 contracts before the activity appeared.
Those calls traded as high as $29.60 today, a gain of more than 400 percent. The stock rallied
The stock soared 87.6 percent in that same period, an enormous gain but one that was still well short of the advance yielded by the 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.
PBYI rocketed 39.15 percent today to close at $52.60. The drug developer rallied hard this morning on the release of Food and Drug Administration documents that appeared favorable toward the company’s breast-cancer treatment.