$QGEN bulls triple their money

Bullish option traders are reaping large profits in Qiagen (QGEN) on merger news today.

On Feb. 6, Market Rebellion’s Unusual Activity Service identified the purchase of 4,000 March $36 calls for $1.90 as part of a bullish spread with shares at $36.04. This was clearly a new position, as open interest in the strike was only 119 contracts before that session began.

Those calls have traded for as much as $5.60 so far today, about 3 times their purchase price. The stock rose 15.4% in the same time frame, underscoring how 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.

QGEN is up 13.54% to $41.01 in early trading. Shares rallied  after Thermo Fisher Scientific (TMO) announced this morning that it is acquiring the genetic-testing company for $11.5 billion.