Bulls triple their money in $DELL

Option traders have tripled their money on bullish positions in Dell Technologies (DELL).

On Jun. 5, Market Rebellion’s Unusual Activity programs flagged the purchase of 5,000 October $55 calls for $2.95 as part of a bullish roll with shares at $50.54. This was clearly fresh buying, as open interest in the strike was only 147 contracts before that session began.

Those calls have traded for as much as $9.26 today, more than 3 times their purchase price. The stock rose 21.65% in the same time frame, showing how options can far outperform their underlying shares.

It is the second winning trade in the name posted on Market Rebellion in the past month.

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.

DELL is up 13.82% to $59.96 in early-afternoon trading. Morgan Stanley raised its price target on the shares to $68 from $50 this morning while last night the company confirmed it is exploring the spin-off of its VMware (VMW) stake.