Bulls take flight with $TWTR

Traders tripled their money on upside option positions in Twitter today.

On Oct. 5, Investitute’s proprietary programs showed that 3,800 Weekly $31 calls expiring this Friday were purchased for $0.91 to $1.13 with shares at $28.49. Volume was above the strike’s open interest of 3,446 contracts, indicating that this was fresh buying.

Those calls traded up to $2.77 this morning, 3 times their initial purchase price. The stock rose 17.94% at the same time, illustrating 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.

TWTR surged 15.47% to $31.80 today. The social-media service topped earnings and sales expectations before the market opened this morning.