Call buyers in $CLDR double their money

Cloudera (CLDR) has seen its shares fall since its IPO, but recent call buyers have doubled their money on longer-dated upside positions.

On Jul. 18, Investitute’s market scanners found that 2,300 February $5 calls were purchased for $1.30 to $1.45 with shares at $5.51. Open interest in the strike was only 123 contracts before the trade occurred, showing that this was a new position.

Those calls have traded for as much as $2.80 so far this morning, about double their average purchase price. The stock has risen 29.95% in the same time period, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a 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.

CLDR is currently up 5.75% to $6.71 today, after opening at its high of the day for $7.27. Last night Carl Icahn reported a 12.62% stake in the company, planning to seek talks to enhance shareholder value.