Bulls give $YELP high marks

Option traders cashed in large profits on upside positions in Yelp that expired today.

On Dec. 27, Investitute’s tracking systems detected the purchase of 2,500 February $35 calls for $3 to $3.25 with shares at $33.38. Volume was well above the strike’s previous open interest of 1,704 contracts, showing that this was fresh buying. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for as much as $5.64 this afternoon, almost twice their initial purchase price. The stock rose 21.87% in the same time period, 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.

YELP jumped 4.58% to $39.94 today. The social-reviews network topped earnings and revenue estimates after the market closed yesterday.