$JPM call prices jump fourfold

Option traders turned substantial gains today on bullish positions opened in JP Morgan only one session earlier.

On Friday, Investitute’s tracking systems found that 5,000 Weekly $118 calls expiring Aug. 3 were purchased for $0.08 with shares at $110.89. This was clearly a new position, as open interest in the strike was a mere 6 contracts before the trade occurred. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded up to $0.34 today, more than 4 times their initial purchase price. The stock rose 3% 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.

JPM was up 1.86% today to close at $113.35. The stock rose along with shares of other banks as interest rates rose.