Call prices double in $CSIQ

Bullish option positions paid off today as Canadian Solar heated up.

On Oct. 3, Investitute’s market scanners identified the purchase of 5,000 January $17 calls for $0.35 to $0.45 with shares at $14.46. These were clearly new positions, as volume was far above the strike’s previous open interest of 980 contracts.

Those calls traded for $0.95 today, more than twice their purchase prices. The stock rose 11.83% 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.

CSIQ was up 2% today to close at $16.32. JP Morgan upgraded the solar-technology company to “neutral” from “underweight” with a $17 price target last week, citing quarterly results reported earlier this month.