Call buyers put up gains with $PINS

Option traders scored big profits today on upside positions in Pinterest (PINS).

On Feb. 4, Market Rebellion’s Unusual Activity tracking systems detected the purchase of 6,000 March $25 calls for $1.25 as part of a bullish spread, with shares at $22.66. Volume was well above the strike’s previous open interest of 420 contracts, showing that this was fresh interest.

Those calls traded for as much as $3.50 so far today, over 2.5 times their purchase prices. The stock rose 18.58% in the same time frame, showing how quickly 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.

PINS opened to an intraday high of $27.25 but has since pulled back, last up 10.63% to $25.46 in afternoon trading. The social networking service beat earnings expectations on its top and bottom lines and guided the fiscal year slightly higher after the closing bell yesterday.