Bullish option traders have turned enormous profits in Exelixis.
On June 16, Investitute’s proprietary programs found that 2,600 July $22 calls were bought for $0.35 to $0.40 with shares at $19.10. These were clearly new positions, as open interest in the strike was just 316 contracts before the trades occurred.
Those calls traded up to $4.62 today, representing an average gain of more than 1,100 percent. The stock has surged 39.3 percent in the same period, but even that huge move pales in comparison to the gain in 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.
EXEL jumped 4.68 percent today to close at $26.61 after hitting a 52-week high of $26.80 earlier in the session. The biopharmaceutical company has risen steadily since reporting positive clinical data on its proposed Cabosun treatment for kidney cancer.