Amicus Therapeutics is rallying on promising data, resulting in big gains for upside option positions.
On Aug. 16, Investitute’s proprietary programs cited the purchase of 2,600 October $11 calls for $2.60 to $2.85 with shares at $12.78. Open interest in the strike was ony 158 contracts before the activity appeared, showing that these were new positions.
Those calls traded for $4.98 this morning, double their original price. The stock rallied 24.8 percent in the same time frame, a strong move but one that was still far below 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.
FOLD jumped 9.21 percent to $16.24 today. The drug maker surged after releasing positive trial results for its proposed treatment of a rare muscle disease. Bank of America / Merrill Lynch upgraded its price target for Amicus to $20 from $15, while Leerink raised its number to $20 from $17.