$JD bulls double their money in days

JD.com has continued to see consistently bullish option activity year-to-date, and traders cashed in on the name again today.

On Mar. 27, Investitute’s tracking systems detected the purchase of 6,000 18April $30.50 calls for $0.52 to $0.57 with shares at $29.21. These were clearly new positions, as open interest in the strike was only 294 contracts before the trade occurred. Investitute co-founder Pete Najarian cited the activity at the time on CNBC’s “Halftime Report.”

New buyers of those 18April $30.50 calls paid as much as $1.05 today, double their initial purchase price. The stock rose 4.48% in the same time frame, 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.

JD was up 2.52% to $30.15 today. The Chinese e-commerce company’s shares have risen with a steadying economic outlook in China.