Key points
- Moderna (MRNA) closed at $174.38 Wednesday, up 177% in a day, after its Merck-partnered melanoma vaccine trial succeeded.
- MRNA call options bought for a penny Tuesday hit $96.53 a share Wednesday, a 965,200% gain.
- A $100 bet on those options Tuesday would have been worth $965,300 if sold at Wednesday's high.
On Tuesday, Moderna (MRNA) closed at $62.96 a share, a normal, boring Tuesday for a stock that had been stuck in the $60s all month. Wednesday morning, the company said its personalized cancer vaccine, developed with Merck (MRK), had hit the mark in a late-stage trial. The vaccine, called Intismeran, paired with Merck's Keytruda, "reduced the risk of melanoma recurrence and prevented tumors from spreading" compared with Keytruda alone, Moderna said. It's the first time an mRNA cancer vaccine has ever cleared a late-stage trial. MRNA opened at $116.02, kept climbing all day, and closed at $174.38. That's up 177% from Tuesday's close, on a stock with a market cap in the tens of billions.
JPMorgan analysts told Reuters "the vaccine's launch is crucial to Moderna's return to profitability." Needham's Joseph Stringer called it a "landmark win" for the company. William Blair's Myles Minter upgraded the stock to outperform, citing a "clear line of sight to revenue diversification" away from COVID vaccines, which is the thing that's been dragging on Moderna's stock for two years. This wasn't a rumor or a leak. It was an actual trial readout, and Wall Street's biggest desks all read it the same way at once.
It was also brutal for anyone who'd bet against the stock. Short sellers still holding roughly 14% of the float into Wednesday got run over. S3 Partners' Matthew Unterman called it "an exceptionally painful move for Moderna shorts," adding that it "materially changes the risk/reward for anyone maintaining a bearish position." S3 pegged the mark-to-market damage to shorts at around $5 billion for the day alone.
Now the fun part. Options traders had priced Moderna as dead money heading into Tuesday's close, so calls at strikes way above the stock price were trading for a penny a contract, the lowest price the exchange lets one print. I checked the actual contract history. An $80 strike call expiring this Friday, August 21, closed Tuesday at $0.01. By Wednesday it traded as high as $96.53. The identical $80 strike expiring next Friday, August 28, did almost the same thing, from a penny to a high of $96.10. It wasn't just those two strikes either.
| Strike | Expires | Tue 8/18 close | Wed 8/19 high | Gain if sold at the high |
|---|---|---|---|---|
| $80 call | Fri, Aug 21 | $0.01 | $96.53 | 965,200% |
| $80 call | Fri, Aug 28 | $0.01 | $96.10 | 960,900% |
| $95 call | Fri, Aug 21 | $0.01 | $81.65 | 816,400% |
| $100 call | Fri, Aug 21 | $0.01 | $76.03 | 760,200% |
Put a real number on it. One contract on the $80 calls expiring this Friday covers 100 shares, so a penny buys the contract for $1. $100 on Tuesday afternoon bought 100 of those contracts. At Wednesday's high of $96.53, each contract was worth $9,653, so the position was worth $965,300. That's a $965,200 gain on a $100 bet, in one trading day. That's the lottery-ticket math people talk about and almost never actually see happen. This time it happened, on paper, to whoever got filled near the bottom.
This story is already making the rounds, and one number worth a gut check: a widely shared post pegged the $120 calls expiring this Friday as the biggest mover of the bunch, calling it a 54,199,900% gain. The real contract data doesn't back that up. That strike also closed Tuesday at $0.01, and it closed Wednesday at $55.58, a real gain of 555,700%, big, but smaller than every strike in the table above, and nowhere near the number getting repeated online. It's an easy mistake to make, options are quoted per share but a contract covers 100 shares, and it's easy to apply that multiplier going one direction and forget it going the other. But it's still off by about 100 times.
I want to be straight about the catch, because there's always a catch. $96.53 was the high of the day. You'd have had to sell at exactly that moment to book the full $965,200 gain, and getting filled at exactly $0.01 in the first place, on a contract that barely traded, is its own kind of luck. Selling works the same way in reverse. Someone else has to actually buy that contract off you at $96.53 for the trade to go through, and on a contract this thin, there's no guarantee a buyer is sitting there waiting to take the other side, especially not for more than one or two contracts at a time. A price printing on the tape isn't the same as being able to sell into it. Options this far out of the money usually just bleed value and expire worthless, which is exactly why they were a penny to begin with. Wednesday was the exception, not the rule.
This is why I keep calling options like this a lottery ticket, not a strategy. Nobody wakes up Tuesday knowing Moderna is about to report a landmark cancer trial the next morning. Whoever owned that $80 call wasn't smart, they were positioned, on purpose or by accident, when a real catalyst landed. The options market moves fast around news like this, and most of the time it moves against you, not for you. I'm not telling anyone to go buy penny calls on random biotechs hoping for the next Moderna. I'm telling you what it looks like on the rare day it actually works.
If you're into the lottery and scratchers, check out ScratchCheck. They'll tell you which scratchers actually have the best odds and score before you buy one.
This column is my personal opinion. I am not a financial advisor, and nothing here is investment advice.
