Bulls triple money in $EBAY

eBay has been ripping higher since Christmas, hanging exponential gains to upside option traders.

On Dec. 4, Investitute’s market scanners identified the purchase of 10,000 18April $33 calls for $1 as part of a bullish roll with shares at $29.41. Open interest in the strike was only 559 contracts before the trade occurred, showing that this was a new position.

Those calls traded for as much as $3.60 today, 3.6 times their purchase price. The stock rallied 21.9% in the same time period, underscoring how options can far outperform their underlying shares. It is the fourth winning trade in the name posted on Investitute in as many weeks.

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.

EBAY rose 0.94% to $35.59 today. The stock is up sharply since activist investment firm Elliott Management disclosed on Jan. 22 that it had taken a $1.4 billion stake in the company.