$GLUU calls up sixfold in week

Option traders are reaping exponential profits on bullish options opened in Glu Mobile on Monday.

On Jan. 7, Investitute’s proprietary programs flagged the purchase of 2,700 January $9 calls for $0.10 to $0.15 with shares at $8.52. This was clearly fresh buying, as volume was well above the strike’s open interest of 1,879 contracts before that session began.

Those calls traded up to $0.75 this morning, 6 times their average purchase price. The stock rose 13.62% in the same time frame, 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.

GLUU was up 3.19% to $9.38 today. Last night the mobile-game developer was initiated with an “overweight” rating at Stephens with a $10.50 price target.