Bulls score huge win in $AMAT

Option traders have quadrupled their money in Applied Materials.

On Feb. 9, Investitute’s tracking systems detected the purchase of 4,000 March $48 calls for $2.68 to $3 with shares at $47.75. This was new positioning, as there was no open interest before the activity appeared.

Those calls traded for $11.72 today, more than 4 times their original purchase price. The stock rallied 24.6% at the same time, 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 up 4.1% today to close at $59.99. The chip-equipment maker has rallied as the semiconductor industry has rebounded in recent weeks.