$EBAY bulls double money

Option activity has been consistently bullish on eBay all month, and traders cashed in on large positions today.

On Feb. 4, Investitute’s tracking systems detected the purchase of 40,000 18April $36 calls for $1.12 as part of a bullish roll with shares at $34.50. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $2.29 this afternoon, more than twice their purchase price. The stock rose 7.54% in the same time period, underscoring how options can far outperform 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.

EBAY was up 0.65% to $36.98. The online-auction giant’s shares have been grinding higher since Jan. 22, when activist investment firm Elliott Management disclosed that it had taken a $1.4 billion stake in the company.