Call buyers rack up profits in $CRM

Bullish option traders have made exponential gains on their money in Salesforce.com (CRM) contracts after its earnings report last night.

On Jun. 22, Our unusual tracking systems found that 3,500 September $200 calls were bought for $9.30 to $9.70 with shares at $190.43. This was clearly a new position, as open interest in the strike was only 2,278 contracts before that session began.

Those calls have traded for as much as $78.00 so far today, more than 8 times the purchase prices. The stock rose 45.37% in the same time frame, showing how quickly options can far outpace gains in 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.

CRM is up 26.99% to $274.36 in mid-session trade. The cloud-computing company topped earnings estimates and raised its outlook on revenues after the market closed yesterday.