Calls light up profits with $FEYE

Strong earnings translated to big gains for upside options in FireEye.

On Dec. 18, Investitute’s proprietary programs cited the purchase of 10,000 February $15 calls for $0.87 as part of a bullish roll with shares at $14.49. Open interest in the strike was only 2,125 contracts, showing that this was a new position.

Those calls traded for $1.49 yesterday, nearly doubling their purchase price. The stock rose 10.6% in the same time frame, illustrating the type of leverage that can be obtained 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.

FEYE jumped 9.35% to $15.44 yesterday. The cybersecurity company rallied after reporting its first quarterly profit Thursday night.