Calls double overnight in $EDU

It took less than 24 hours for option traders to double their money in New Oriental Education & Technology.

Just yesterday, Investitute’s tracking systems detected the purchase of 4,600 May $95 calls for $2.30 to $2.50 with shaers at $87.95. Volume was well above the strike’s open interest of 2,924 contracts, indicating that this was fresh buying.

Those calls traded up to $4.80 this morning, more than twice their initial purchase price. The stock rose 8.9% at the same time, underscoring how quickly options can far outpace gains in 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.

EDU jumped 3.97% to $90.27 today. The Beijing-based school operator beat earnings estimates and issued strong guidance this morning.