$BABA bulls boost quick profits

Bullish option traders who opened upside positions this morning in Alibaba had nearly tripled their money before the closing bell.

Just this morning, Investitute’s market scanners found that 11,000 Weekly $146 calls expiring on January 4 were bought, mostly in one print of 6,400, for $0.45 and $0.46 with shares at $131.09. Volume was well above the strike’s open interest of 584 contracts, showing that this was clearly a new position.

Those calls traded for as much as $1.15 before the closing bell today, 2.5 times their purchase prices. The stock rallied 5.19% at the same time, a huge move but nothing like that of its options on a relative basis.

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.

BABA was up 4.63% to close at $138.00 today. The Chinese online retailer rallied along with its e-commerce peers as Amazon.com (AMZN) announced record-breaking holiday season orders.