$AMZN calls deliver gains to option bulls

Option traders posted huge profits today as Amazon.com (AMZN) neared its highs.

On Jun. 16, Market Rebellion’s Unusual Activity Service identified bullish option activity in the name in two separate strikes with shares at $3,395.77:

–3,700 June $3420 calls were purchased for $18.00 to $24.40 above open interest of 1,696 contracts.
–9,000 June $3450 calls were purchased for $9.00 to $13.46 above open interest of 2,867 contracts.

Those calls sold for as much as $83.45 and $57.60 today, respectively, more than 3 and 4 times their purchase prices. The stock rose by as much as 3.22% in the same time frame, showing how options can far outperform moves in 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.

AMZN rose 4.19% to close at $3,486.90 today.