$MSFT call prices jump 3-fold

Bullish option traders have run up large gains in Microsoft ahead of quarterly results this afternoon.

On April 1, Investitute’s tracking systems showed that 10,000 Weekly $120 calls expiring this Friday were bought for $2.10 as part of a bullish spread with shares at $118.58. This was clearly a new position, as volume was well above the strike’s previous open interest of 7,896 contracts. Investitute co-founder Jon Najarian cited the unusual activity at that time after CNBC’s “Halftime Report.”

Those calls traded for as much as $6.25 today, 3 times their purchase price. The stock rose 6.16% 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.

MSFT was off 0.02% to $125.41 with less than an hour left in today’s session. The software giant will report earnings after the closing bell.