Calls triple overnight in $CIEN

Option traders collected substantial profits today on bullish positions opened in Ciena (CIEN) just one session earlier.

Late yesterday afternoon, Investitute’s proprietary programs showed that 2,000 Weekly $44 calls expiring this Friday were purchased for $0.05 to $0.23 with shares at $43.18. This was clearly fresh buying, as open interest in the strike was a mere 84 contracts before the activity appeared.

Those calls traded for as much as $0.46 this morning, more than 3 times their average purchase price. The stock rose 1.69% at the same time, illustrating the kind of leverage that can be achieved 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.

CIEN reached a session high of $43.96 this morning but has pulled back to $43.09 in midday trading, down 0.44% on the day. The company rallied with other networking names after Cisco’s (CSCO) $2.6 billion acquisition of Acacia Communications (ACIA) announced yesterday.