$TEVA calls increase fourfold

Bullish traders are getting rewarded for buying the dip in Teva Pharmaceutical.

On Nov. 15, Investitute’s tracking systems detected the purchase of 10,600 December $12.50 calls for $0.30 to $0.72 with shares at $12.52. Volume was well above the strike’s open interest of 7,888 contracts, indicating that this was fresh buying.

Those calls traded up to $1.15 today, nearly 4 times their original purchase price. The stock rose less than 7 percent in the same time, underscoring how quickly options can far 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.

TEVA was up 1.91 percent to $13.33 today. The drug company fell sharply after its last earnings report early this month but has been coming off those lows in recent days.