$CVNA calls rocket sixfold

Carvana has yielded major gains on bullish option positions today, thanks to strong quarterly results.

Way back on Dec. 14, Investitute’s proprietary programs found that 4,000 May $35 calls were bought for $6.60 as part of a bullish roll with shares at $32.36. Open interest in the strike was only 7 contracts before that session began, showing that this was a new position.

Those calls were marked at $39.05 this afternoon, about 6 times their purchase price. Although the stock price has more than doubled in the same time period, the exponential increase in the calls shows how options can far outperform even huge moves 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.

CVNA jumped 5.12% to $75.32 today. The online car marketplace topped revenue expectations after the market closed yesterday.