Bulls score in $JD

Option traders that made bullish trades in JD.com (JD) back in April scored big today after the company reported earnings results this morning.

On Apr. 21, Market Rebellion’s Unusual Activity systems detected the purchase of 2,000 September $49 calls as part of a bullish combo for $2.76 with shares at $42.29. Volume was well above the strike’s previous open interest of just 162 contracts, indicating that this was a new position.

Those calls closed marked for $17.75 today and ended the session marked at $13.95, more than 6 times their purchase price. The stock rose 58.35% in the same time period, showing how options can far outpace gains in 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.

JD was up 7.93% to $66.95 at the close today. The Chinese e-commerce stock topped expectations in its earnings report delivered this morning.