Bulls binge on big profits in $ROKU

Bullish option traders have racked up large profits in Roku (ROKU) today after its earnings report.

On May 28, Investitute’s tracking systems detected the purchase of 9,970 January $75 calls for $25.40 to $25.50 as part of a bullish roll from a previous winning trade with shares at $89.19. This was clearly a new position, as open interest in the strike was just 10,221 contracts before that session began.

Those calls traded for as much as $52.14 so far today, more than twice their purchase price. The stock surged 37.89% in the same time period, showing how options can far outperform their underlying shares on a relative basis.

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.

ROKU is currently up 19.52% to $120.68. The video-streaming company reported quarterly earnings after the closing bell yesterday, guiding its fiscal year higher and beating on its top and bottom lines, driving a slew of analyst upgrades by this morning’s opening bell.