Quick surge in $AMRN calls

Option traders have more than tripled their money on bullish positions opened in Amarin just three sessions ago.

On Jan. 8, Investitute’s market scanners detected the purchase of 3,000 March $14 calls for $1.60 to $1.65 with shares at $13.67. This was clearly fresh buying, as volume was more than double the strike’s open interest of 1,425 contracts before the trades occurred. Investitute co-founder Jon Najarian named AMRN as his final trade at that time on CNBC’s “Halftime Report” after spotting the unusual activity.

Those calls traded for $5.90 just before the closing bell today, more than 3.5 times their purchase prices. The stock soared 36.21% in the same time frame, a huge move but still 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.

AMRN spiked higher by 22.09% to $18.35 on heavy volume today. The stock rallied after the biopharmaceutical company’s CEO reportedly made positive sales comments at the annual JPMorgan Healthcare Conference yesterday.