$BABA bulls score large profits

Option traders scored large profits today on upside positions in Alibaba (BABA).

On Nov. 25, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,100 Weekly $195 calls expiring today for $1.49 to $1.82 with shares at $189.43. This was clearly fresh buying, as open interest in the strike was only 1,431 contracts before that session began.

Those calls have traded for as much as $6.20 so this morning, about 4 times their original purchase price. The stock rose 6.17% in the same time period, underscoring how options can far outperform moves in their underlying shares on a relative basis.

It is the second winning trade in the name to be posted on Market Rebellion this week, as both bears and bulls have gotten their fill.

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.

BABA is currently trading for $200.18, up 0.065% for the session. The Chinese e-commerce giant rebounded sharply this week to make a new 52-Week high today of $201.42.