Bulls quadruple money in $AMAT

Option traders logged exponential gains today on upside positions in Applied Materials (AMAT).

On Sep. 22, Market Rebellion’s Unusual Activity Service identified the purchase of 2,500 November $60 calls for $3.39 as part of a bullish roll with shares at $57.97. This was clearly fresh buying, as open interest in the strike was only 531 contracts before that session began.

Those calls traded ended the session marked at $14.30 today, more than 4 times their purchase prices. The stock rose 28.48% in the same time frame, underscoring how 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.

AMAT closed at $74.48 this afternoon, up 2.29% on the session. The chip-equipment maker topped earnings and sales estimates after the market closed Thursday.