$CARG bulls triple money

A bullish option position opened in CarGurus (CARG) less than two weeks ago was closed today with exponential gains.

On Aug. 19, Market Rebellion’s Unusual Activity Service found that 3,000 September $27 calls were bought for $1.20 as part of a bullish roll above the existing open interest of 110 contracts with shares at $26.47.

Those calls sold for $3.80 this afternoon , more than 3 times their purchase price. The stock rose 15.83% in the same time frame, showing how quickly options can far outpace 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.

CARG was down 2.16% to $30.38 today. The automotive research and shopping website posted a beat on both the top and bottom in its earnings report delivered after the close on Aug. 5, and was recently upgraded to Outperform from Sector Perform at RBC Capital, which also raised its price target for shares to $40 from $34.