$BIDU bulls take the wheel

Bullish option traders got behind the wheel of big profits today on upside bets made in Baidu (BIDU).

On Nov. 27, Market Rebellion’s Unusual Activity Service identified the purchase of 7,500 January $150 calls for $2.36 to $3.05 with shares at $137.00. This was clearly a new position, as open interest in the strike was only 7,482 contracts before the trade occurred.

Those calls traded for as much as $37.05 today, more than 12 times their purchase prices. The stock rose 35.95% at the same time, illustrating the kind of leverage that can be achieved with options.

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.

BIDU was up 13.83% to $185.50 at the closing bell today. The Chinese search-engine operator is considering making its own electric vehicles (EV) according to a Reuters report.