Call prices double overnight in $WDC

Bullish option traders have racked up big profits in Western Digital today on positions with time opened early the previous morning.

Just yesterday, Investitute’s tracking systems flagged the purchase of 3,000 18April $49 calls for $0.65 to $0.82 with shares at $45.51. This was clearly fresh buying, as open interest in the strike was only 307 contracts before that session began.

Those calls traded for as much as $1.92 today, double their purchase prices. The stock rose 6.72% in the same time period, showing how 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.

WDC climbed 5.05% to $48.06 today. The digital-storage device manufacturer was assumed with coverage by RBC Capital yesterday morning with an Outperform rating and $55 price target.