$SGEN bulls quadruple money

Option traders are racking up huge gains on upside positions opened in Seattle Genetics (SGEN) less than two weeks ago.

On Sept. 18, Market Rebellion’s tracking systems detected the purchase of 2,600 October $80 calls for $1.39 to $2.95 with shares at $72.73. This was clearly fresh buying, as open interest in the strike was only 706 contracts before that session began.

Those calls traded for as much as $9.44 this morning, more than 4 times their average purchase price. The stock rose 21.26% in the same time frame, a large move but one that was still dwarfed by that of its options on a relative basis.

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.

SGEN is up 13.47% to $86.24 near midday trading. Piper Jaffray raised its price target on the biotechnology company to $95 from $75 this morning based on “compelling” clinical data on its treatment for bladder cancer.