$TEVA calls turn quick profits

It took less than three sessions for option traders to triple their money in Teva Pharmaceutical.

On Sept. 13, Investitute’s market scanners identified the purchase of 10,000 September $23.50 calls for $0.33 as part of a bullish spread with shares at $22.34. This was clearly a new position, as volume was well above the strike’s open interest of 4,048 contracts.

Those calls sold for $1.20 this morning, more than 3.5 times their purchase price. The stock rose 9.76% in the same time frame, showing how quickly 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.

TEVA was up 2.54% to $23.43 today. The generic-drug maker rallied after the Food and Drug Administration approved the company’s Ajovy migraine treatment.