$BABA call prices quadruple

Bullish option traders are quadrupling their money on large upside positions in Alibaba (BABA) today, as the shares make a new all-time-high.

Back on Aug. 2, our Unusual Activity Service flagged the purchase of 14.900 January $165 calls for $13.55 as part of a bullish roll with shares at $161.47. Volume was far above the strike’s previous open interest of 5,790 contracts, showing that this was a new position.

Those calls are currently marked for $64.30, more than 4.5 times their purchase price. The stock has risen 41.97% at the same time, illustrating the kind of leverage that can be achieved with options.

It is the second winning trade in the name to be posted on Market Rebellion in as many weeks.

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 up 2.71% to $229.93 this afternoon, just off its new 52-Week high of $230.00 made earlier in the session. The Chinese e-commerce company has risen alongside its peers ahead of the expected signing of the Phase 1 trade deal between the U.S. and China this Wednesday.