$ADI bulls triple their money

Option traders are posting exponential gains on upside positions in Analog Devices (ADI) today for the second time in less than a week.

On Dec. 11, Market Rebellion’s Unusual Activity Service detected the purchase 2,100 December $119 calls for $0.60 to $0.85 with shares at $116.05. This was clearly fresh buying, as open interest in the strike was a mere 15 contracts before that session began.

Those calls have traded for as much as $2.13 so far today, more than 3.5 times their purchase price. The stock rose 3.33% in the same time frame, underscoring how quickly options can far outperform their underlying shares.

It is the second winning trade in the name posted on Market Rebellion since Dec. 11.

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.

ADI is up 0.96% to $119.91 this morning. The chip maker has rebounded since missing quarterly results in late November.