$AXP bulls double their money

It took less than a week for option traders to turn big gains in American Express.

On Oct. 15, Investitute’s proprietary programs flagged the purchase of 3,500 October $102 calls for $2.45 to $2.84 with shares at $102.96. These were clearly new positions, as open interest in the strike was a mere 94 contracts before the activity appeared.

Those calls traded for $5.50 this morning, more than twice their average purchase price. The stock rose 4.46 percent in the same time frame, illustrating the kind of leverage that can be achieved quickly 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.

AXP closed at $106.73 today, up 3.78% on the session. The credit-card giant topped quarterly expectations and raised its outlook after the market closed yesterday.