$RIGL option bulls score

Rigel Pharmaceuticals (RIGL) is surging to fresh multi-year highs today, turning exponential gains on bullish option positions.

On Feb. 12, Market Rebellion’s Unusual Option Activity Service identified the purchase of 2,200 March $10 calls for $0.15 to $0.20 with shares at $4.46. This represented fresh buying, as that volume was well above the strike’s previous open interest of just 1,881 contracts.

Those calls this morning have traded for $0.40, at least double their purchase prices. The stock rose by as much as 19.95% in the same time period, showing how options can far outpace gains in 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.

RIGL was last higher on the day by 8.83% at $4.93 after reaching an intraday, and multiyear, high of $5.50 earlire. The biotechnology company announced a global exclusive license agreement and strategic collaboration to co-develop and commercialize Rigel’s R552 with Eli Lilly ($LLY).