$CIEN calls up 7-fold overnight

Option traders racked up exponential profits today on bullish positions opened in Ciena (CIEN) only one session earlier.

Just yesterday, Market Rebellion’s Unusual Activity Service found that 4,500 Weekly $36.50 calls expiring tomorrow were bought for $0.67 to $1.04 with shares at $35.40. This was clearly fresh buying, as open interest was only 475 contracts before the activity appeared.

Those calls traded for as much as $6.25 so far today, more than 7 times their average purchase price. The stock rose 20.76% 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.

CIEN closed today at $42.62, up 20.36%. The network-technology company missed quarterly expectations but issued a strong outlook that sent shares spiking higher.