$BABA keeps on delivering for bulls

Option traders again scored large profits today on upside positions in Alibaba (BABA).

On Dec. 5, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,600 Weekly $202.50 calls, expiring tomorrow, for $1.13 to $1.55 with shares at $197.37. This was clearly fresh buying, as open interest in the strike was only 1,100 contracts before that session began.

Market Rebellion co-founder Pete Najarian chose BABA as his final trade at the time on CNBC’s “Halftime Report.”

Those calls have traded for as much as $4.00 so this morning, about 3 times their average purchase price. The stock rose 4.37% in the same time period, underscoring how options can far outperform moves in their underlying shares on a relative basis.

It is the third winning trade in the name to be posted on Market Rebellion over the past two weeks, as both bears and bulls have gotten their fill.

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 currently trading for $203.18, down by 0.75% but after the Chinese e-commerce giant made a new 52-Week high earlier this session of $206.00.