Bulls quadruple their money in $AMAT

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

On Jan. 6, Market Rebellion’s Unusual Activity Service identified the purchase of 4,100 Weekly $100 calls expiring on Jan. 29 for $0.65 to $0.90 with shares at $91.81. This was clearly fresh buying, as open interest in the strike was only 49 contracts before that session began.

Those calls traded up to $4.00 so far today, more than 4 times their purchase prices. The stock rose 9.86% 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 was last at $99.76 this afternoon, up 1.84% on the session. The chip-equipment maker was added by BofA to its US 1 List yesterday.