Call prices double in $WDC

Bullish option traders have racked up big profits in Western Digital.

On Jan. 25, Investitute’s tracking systems flagged the purchase of 4,100 March $45 calls mostly in one print of 3,113 for $3.10 with shares at $44.15. This was clearly fresh buying, as open interest in the strike was only 281 contracts before that contract began.

Those calls traded for as much as $8 today, more than 2.5 times their purchase price. The stock rose 19.82% in the same time period, showing how options can far outperform their underlying shares. Investitute co-founder Jon Najarian updated the trade on CNBC’s “Halftime Report” this afternoon.

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.

WDC climbed 1.84% to $52.61 today. The digital-storage device manufacturer is up sharply since reporting earnings in January.