Call prices double in $ALGN

It took barely a week for option traders to bite off big profits in Align Technology.

On April 17, Investitute’s proprietary programs flagged the purchase of 2,100 May $280 calls for $12.50 to $14 with shares at $273.58. This was clearly fresh buying, as open interest in the strike was only 157 contracts before the activity appeared.

Those calls sold for as much as $27.20 today, twice their average purchase price. The stock rose 11.51% in the same time frame, underscoring how quickly options can far outperform their underlying shares on a relative basis.

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.

ALGN spiked to $315.89 this morning before pulling back to close at $296.74, off 0.11% on the session. The orthodontic-device maker topped earnings and revenue expectations after the market closed yesterday.