Bulls secure big profits in $ZS

Bullish option traders secured giant gains in Zscaler (ZS) today as its post-earnings run continues.

On the morning of Friday, May 29, Market Rebellion’s Unusual Activity programs found that 4,250 Weekly $100 calls expiring on June 5 were purchased for $0.60 to $2.00 with shares at $86.54. This was clearly a new position, as open interest in the strike was only 539 contracts before the activity appeared.

Those calls traded for up to $13.50 this afternoon, at least 6.5 times their purchase prices. The stock rose 30.14% in the same time frame, underscoring the kind of leverage that can be obtained with options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

ZS was up 12.12% today to close at $109.98. The global cloud-based information security company topped earnings expectations last Thursday while also raising guidance for the fiscal year.