Bulls score in $PINS

Option traders scored big profits today on upside positions in Pinterest (PINS) after its earnings report.

Market Rebellion’s Unusual Option Activity Service flagged bullish option activity in the name on two consecutive sessions last month.

–On Jun. 4, 7,000 August $22 calls were purchased for $2.40 above open interest of 2,588 contracts with shares at $21.51.
–Then on Jun. 5, 7,000 more August $22 calls were purchased for $2.35 to $2.89 below open interest of 9,987 contracts but apparently adding to the previous day’s trade with shares at $22.43.

Those calls traded for as much as $22.00 today, at least 7.5 times their purchase prices. The stock rose 53.93% in the same time frame, showing how quickly 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.

PINS was last up 32.51% to $33.38 this afternoon. The social networking service reported earnings before the opening bell today, beating on revenues and announcing a milestone of over 400 million monthly users to the platform.