Bulls triple money in $TWTR

Twitter has rebounded sharply since Christmas, yielding large returns on upside option positions.

On Dec. 27, Investitute’s proprietary programs flagged the purchase of 2,800 January $29.50 calls for $1.30 in one print with shares at $27.63. This was clearly a new position, as open interest in the strike was only 167 contracts before that session began.

Those calls traded for as much as $3.63 this morning, nearly 3 times their purchase price. The stock rose 19.54% in the same time, underscoring 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 was up 2.6% to $33.09 today. BofA Merrill Lynch upgraded the social-media name by two notches this morning to “buy” from “underperform” and raised its price target to $39 from $31.