Call prices soar overnight in $BB

BlackBerry (BB) surged higher today, yielding large returns on upside option positions opened yesterday.

Yesterday afternoon, Feb. 24, our Unusual Activity scanners identified the purchase of 15,000 Weekly $11 calls expiring next Friday, Mar. 5, for $0.40 to $0.65 above open interest of just 1,182 contracts with shares at $10.36.

Those calls traded up to $1.86 this morning, about 3 times their purchase prices. The stock rose 16.99% at the same time, showing how options can quickly outperform their underlying shares by a wide margin.

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.

BB spiked to an intraday high of $12.15 this morning but has pulled back since, last down 2.3% at $11.06.