Bulls go on a spree with $SHOP

Bullish option traders have more than quadrupled their money in Shopify (SHOP).

On Tuesday of this week, Jun. 16, Market Rebellion’s Unusual Activity Scanners detected the purchase of 2,900 June $830 calls, expiring today, for $8.00 to $14.30 with shares at $788.00. This was clearly fresh buying, as open interest in the contract before that session began was a mere 331.

Those calls traded for as much as $64.19 today, at least 4 times their purchase prices. The stock rose 13.5% in the same time, a large move but nowhere near that of its options.

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.

SHOP was last higher by 2.59% to $885.90 in early afternoon trade, just off of its 52-week high of $895.56 made earlier in the session. The Canadian e-commerce company’s price target was raised yesterday morning at RBC Capital to $1,000 from $825.