Bulls take a big bite from $AAPL

Option traders are logging big profits on upside positions opened in Apple (AAPL) a little over one month ago.

On Jul. 13, Market Rebellion’s Unusual Activity Service detected the purchase of 3,685 September $420 calls for $13.14 to $13.40 with shares at $394.53. This was clearly fresh buying, as open interest in the strike was only 3,254 contracts before the activity appeared.

Those calls traded for as much as $57.00 today, at least 4 times purchase prices. The stock rose 20.03% at the same time, underscoring how quickly 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.

AAPL closed up by 2.22% to $473.10 today. The iPhone maker’s shares traded up today to a new high after the company hit a $2 trillion market cap yesterday.