Bulls double money in $XLNX

It took less than two weeks for option traders to run up large profits in Xilinx.

On Feb. 12, Investitute’s market scanners identified the purchase of 3,500 March $120 calls for $2.43 as part of a bullish spread with shares at $116.64. This was clearly a new position, as volume was well above the strike’s previous open interest of 2,069 contracts. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for $5.50 today, more than twice their purchase price. The stock rose 5.97% in the same time frame, 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.

XLNX was up 2.93% to $122.75 today. Baird raised its price target on the programmable-chip maker to $120 from $105 this morning while keeping an “outperform” rating on the stock.