Traders score big with $TSRO

Bullish option traders have doubled their money in Tesaro.

On Aug. 3, Investitute’s proprietary programs flagged the purchase of 5,000 January $50 calls for $1.95 to $2 with shares at $29.90. This was clearly fresh buying, as open interest in the strike was only 292 contracts before that session began.

Those calls traded up to $4.19 today, more than double their purchase prices. The stock rose 25.52% in the same time, a large move but nowhere near that of its options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

TSRO spiked to $39.48 this morning before settling back to close at $34.93, still up 5.47% on the session. The biopharmaceutical oncology firm rallied last night after announcing the expansion of clinical trials for its Zejula drug combined with an antibody in the treatment of lung cancer.