$NKE calls surge fourfold

Bullish option traders have scored huge profits in Nike (NKE) since its strong quarterly results last week.

On Aug. 23, our tracking systems detected the purchase of 3,000 January $100 calls for $0.60 to $0.68 above open interest of 2,188 contracts with shares at $82.28.Market Rebellion co-founder Jon Najarian cited the unusual activity at that time in our virtual trading room.

Those calls traded for as much as $2.70 early today, more than 4 times their average purchase price. The stock rose 14.15% in the same time period, underscoring how 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.

NKE reached an all-time high of $94.74 right after the opening bell but has pulled back with the broader market to trade at $92.89, down 1.1% on the session. The athletic-wear giant has rallied since surpassing expectations on the top and bottom lines on Sept. 24.