$BABA bulls score large profits

Option traders have doubled their money on upside positions in Alibaba (BABA).

On Oct. 1, our tracking systems detected the purchase of 7,300 November $165 calls for $8.25 above open interest of 1,357 contracts with shares at $165.11. Market Rebellion co-founder Jon Najarian cited the unusual activity two sessions later on CNBC’s “Halftime Report.”

Those calls traded for as much as $17.40 so far today, more than twice their purchase price. The stock rose 10.3% in the same time period, illustrating the kind of leverage that can be achieved 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.

BABA is up 2.12% to $180.20 this morning. The Chinese e-commerce giant topped earnings estimates on Nov. 1.