$AMAT calls double overnight

Bullish option traders are racking up big profits today on upside positions opened in Applied Materials (AMAT) only one session earlier.

Just yesterday, Market Rebellion’s Unusual Activity Service detected the purchase of 5,000 February $70 calls for $0.37 to $0.52 with shares at $65.17. This was clearly fresh buying, as open interest in the strike was only 1,870 contracts before the activity appeared.

Those calls have traded for as much as $0.89 so far today, twice their average purchase price. The stock rose 6.16% at the same time, illustrating the kind of leverage that can be achieved quickly with 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.

AMAT is up 5.34% to $68.86 in early afternoon trading. The chip-equipment maker topped earnings and sales estimates after the market closed yesterday.