$AVGO bulls double money

Option traders have turned big profits on upside positions opened in Broadcom (AVGO) barely a week ago.

On June 3, Investitute’s proprietary programs flagged the purchase of 2,395 September $270 calls for $12.20 as part of a bullish spread with shares at $254.64. Open interest in the strike was only 208 contracts before the trade occurred, showing that this was a new position.

Those calls traded for as much as $28.20 today, more than twice their purchase price rose 11.56% in the same time frame, 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.

AVGO is up 0.49% to $281.58 in afternoon trading. The stock rallied this morning after a regulatory filing showed that Broadcom will supply Apple (AAPL) with radio-frequency components for smartphones, tablets, and watches.