$PCRX calls quadruple in one day

Pacira Pharmaceuticals has cleared a key regulatory hurdle, handing huge gains to bullish option traders.

On Friday, Investitute’s proprietary programs flagged the purchase of 3,400 April $32.50 calls for $0.79 to $1 with shares at $29.20. These were clearly new positions, as open interest in the strike was only 581 contracts before the activity appeared.

Those calls traded for $3.30 today, more than 4 times their original purchase price. The stock rose 21.2% at the same time, a large move but nowhere near that of its options.

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.

PCRX was up 3.6% to $34.50 today. Shares began climbing Friday after the Food and Drug Administration approved Pacira’s application to wide use of its Exparel product for localized post-surgery analgesia.