$BABA calls soar 9-fold overnight

It took only one session for bullish option traders to rack up huge gains in Alibaba (BABA).

Just yesterday, Market Rebellion’s Unusual Activity Service found that 12,600 Weekly $225 calls expiring on Feb. 7 were bought for $0.24 to $0.39 with shares at $211.78. This was clearly fresh buying, as open interest in the strike was 3,446 contracts before the activity appeared.

Those calls have traded for as much as $2.78 so far today, about 9 times their average purchase price. The stock rose 5.88% at the same time, underscoring how quickly options can far outperform 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.

BABA is up 4.94% to $223.62 this afternoon. The Chinese e-commerce giant is scheduled to report earnings on Feb. 13 before the market opens.