Bulls double their money in $DELL

Option traders have doubled their money on bullish positions in Dell Technologies (DELL).

On June 19, Market Rebellion’s Unusual Activity programs flagged the purchase of 7,900 August $52.50 calls for $1.70 to $1.84 with shares at $48.70. This was clearly fresh buying, as open interest in the strike was only 2 contracts before that session began.

Those calls have traded for as much as $4.20 today, more than twice their purchase prices. The stock rose 10.47% in the same time frame, showing how options can far outperform their underlying shares.

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.

DELL is up 2.74% to $53.68 in late-afternoon trading. Deutsche Bank raised its price target on the shares to $60 from $55 this morning citing the “valuation discount” beginning to be acknowledged in the stock after it announced last week that is is considering options regarding its stake in VMWare (VMW).