$FB calls score big in 24 hours

Facebook surged today after reporting strong earnings, propelling upside options even higher.

Late yesterday afternoon, Investitute’s tracking systems detected the purchase of 4,000 July $175 calls for $3.70 in one print with shares at $160.26. This was clearly a new position, as volume was above the strike’s open interest of 3,705 contracts.

Those calls traded for $9.50 today, more than 2.5 times their purchase price. The stock rose 9.9% at the same time, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

FB jumped 9.06% to $174.16 today. The social network blew past quarterly projections after the market closed yesterday.