Why $VKTX call prices tripled

Bullish option traders posted huge gains in Viking Therapeutics today.

On June 7, Investitute’s market scanners identified the purchase of 1,000 January $15 calls for $3 and $3.10 with shares at $10. There was no open interest in the strike before that session began, showing that this was a new position.

Those calls rose to $10 today, more than 3 times their purchase prices. The stock skyrocketed 135.3% in the same time period, an enormous move but still one that is well below 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.

VKTX soared 87.3% to $19.46 today. The drug maker spiked higher this morning on positive clinical-test results for its treatment of non-alcoholic fatty liver disease.