$DIA calls surge over 4-fold

Bullish option traders collected exponential profits in the SPDR Dow Jones Industrial Average Fund today as the index continued its rally off its Christmas lows.

On Jan. 24, Investitute’s market scanners found that 2,000 Weekly 01March 255.00 calls were bought for $1.10, as part of a bullish spread, with shares at $244.16. Volume was well above the strike’s open interest of 210 contracts, showing that it was a new position.

Those calls traded for as much as $5.05 today, more than four-and-a-half times their purchase price. The stock rose 5.97% at the same time, underscoring how quickly, and far, options can outperform their underlying assets.

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.

DIA climbed to close at its high-of-day up 1.65% on the session, at $258.65. The exchange-traded fund, which tracks the benchmark Dow Jones Industrial Average Index, made its eighth weekly positive close in a row this week, fueled by better than feared economic indicators and positive developments on the Sino-U.S. trade front.