$PFE call prices surge fourfold

Bullish option traders cashed in on winning positions in Pfizer today with shares at multi-year highs.

On Aug. 1, Investitute’s tracking systems detected the purchase of 13,000 December $41 calls mostly in one print of 9,000 for $0.84 as part of a bullish roll with shares at $40.18. These were clearly new positions, as open interest in the strike was only 3,707 contracts before the activity appeared.

Those calls sold for $3.50 today, more than 4 times their purchase price. The stock rose 9.88% in the same time period, underscoring how 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.

PFE climbed to $44.31 this morning before pulling back to close at $43.68, off 0.25% on the session. The drug maker, which reached a 52-week high of $44.46 two sessions earlier, is up sharply since reporting quarterly results at the end of July.