$MSFT calls soar 8-fold overnight

Option traders reaped huge returns today on bullish positions in Microsoft opened just one session earlier.

Just yesterday, Investitute’s tracking systems found that 13,400 Weekly $110 calls expiring this Friday were purchased for $0.11 to $0.34 with shares at $106.99. This was clearly fresh buying, as volume was far above the strike’s open interest of 3,835 contracts before that session began. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.81 today, 8 times their average purchase price. The stock rose 4.04% at the same, showing 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.

MSFT was up 3.71% today to close at $111.12. The software giant has held up relatively well through the recent volatility and has surpassed Apple (AAPL) in market capitalization.