$DBX bulls double their money

Dropbox (DBX) has nearly recouped all of its losses since reporting earnings in late February, and bulls have doubled their money on upside option positions in the name.

On June 5, Investitute’s proprietary programs flagged the purchase of 9,000 July $23 calls for $0.95 to $1.10 with shares at $22.33. This was clearly fresh buying, as open interest in the strike was only 3,456 contracts before that session began. Investitute co-founder Pete Najarian cited the unusual activity at the time, on CNBC’s “Halftime Report.”

Those calls traded for as much as $2.65 today, 2.5 times their initial purchase price. The stock rose 13.61% in the same time frame, illustrating how options can far pace 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.

DBX climbed to $25.42 this morning but pulled back to $24.80 by the close, down 0.84% on the session. The file hosting service company’s stock traded at its highest level today since reporting earnings on February 21.