$FB call prices surge 5-fold

Patient option traders are seeing huge gains in bullish positions opened in Facebook at the end of last year.

On Dec. 31, Investitute’s tracking systems detected the purchase of 14,958 March $155 calls for $2.98 as part of a bullish roll with shares at $132.98.
This was clearly a new position, as volume was far above the strike’s previous open interest of 4,562 contracts.

Those calls traded for as much as $16.95 today, more than 5.5 times their purchase price. The stock rose 29.12% in the same time period, a large move but nowhere near that of its options on a relative basis.

It is the third winning trade in the name posted on Investitute since the end of January.

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.

FB was up 2.32% to $171.26 today. The social network’s shares rebounded back above their 200-day moving average yesterday.