Bulls collect profits in $AKAM

Bullish traders have made big profits on their upside option trades in Akamai (AKAM) ahead of earnings.

On Jun. 26, Market Rebellion’s Unusual Activity programs flagged the purchase of 2,000 August $105 calls for $6.60 to $6.80 with shares at $104.74. This was clearly fresh buying, as open interest in the strike was only 713 contracts before that session began.

These calls traded for $12.17 today, nearly double their original purchase prices. The stock rose 10.27% 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.

AKAM was up 2.3% to $115.24 today. The cloud-content service is scheduled to report earnings on Jul. 28 after the market closes.