Bulls double their money in $SPY calls

Bullish option traders doubled their money in the SPDR S&P 500 Fund (SPY) today as the index made a new all-time-high.

On June. 28, Investitute’s market scanners found that 20,000 Weekly 05July $298 calls were bought for $0.48 to $0.49 with shares at $292.55. Volume was over double the strike’s open interest of 9,691 contracts, showing that it was a new position.

Those calls traded for as much as $1.05 this afternoon, more than twice their purchase prices. The stock rose 1.49% at the same time, underscoring how quickly 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.

SPY climbed to a new all-time-high of $296.91 today before pulling back to close at $295.66, just shy of its previous closing-basis high made on June 20. The exchange-traded fund, which tracks the benchmark S&P 500 index, rallied today after the positive developments at this past weekend’s G20 summit.