$BOX calls triple overnight

It took less than 24 hours for bullish option traders to post exponential gains in Box.

Just yesterday, Investitute’s tracking systems detected the purchase of 5,000 May $21 calls for $0.20 above open interest of 335 contracts with shares at $19.02. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $0.73 today, more than 3.5 times their purchase price. The stock rose 6.99% at the same time, showing how quickly options can far outpace gains in 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.

BOX was up 2.74% to close at $20.26 today. Wells Fargo issued a “cautiously optimistic report on April 9 after the cloud-services company held investor meetings, keeping an “outperform” rating and a $27 price target. Quarterly results are estimated for May 29 after the close.