Call buyers score big profits in $CRM

Bullish option traders are making exponential gains on their money in Salesforce.com (CRM) as it reaches new highs.

On Aug. 3, Market Rebellion’s Unusual Activity Service found that 7,800 October $260 calls, expiring tomorrow, were bought for $5.25 as part of a bullish spread above the existing open interest of 1,237 contracts with shares at $240.16.

Those calls traded for as much as $30.60 today, more than 5.5 times the purchase price. The stock rose 21% in the same time frame, showing how quickly options can far outpace gains in 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.

CRM was up 1.96% to $290.02 at the close, setting new highs this session.