$BABA calls triple 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 35,000 Weekly $235 calls expiring on New Year’s Eve, this Thursday, were bought for $1.76 to $2.52 with shares at $231.28. This was clearly fresh buying, as open interest in the strike was 7,816 contracts before the activity appeared.

Market Rebellion co-founder Jon Najarian noted the activity during his “3@3” report at the time, as well as on CNBC’s “Halftime Report.”

Those calls traded for as much as $8.45 today, at least 3 times their purchase prices. The stock rose 4.93% 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 was up 0.9% to close at $238.39 this afternoon. The Chinese e-commerce giant is estimated to next report earnings on Feb. 11 before the market opens.