$EBAY call prices skyrocket tenfold

Bullish option traders racked up enormous gains in eBay today.

On Dec. 22, Investitute’s tracking systems detected the purchase of 5,000 February $39 calls for $0.79 as part of a bullish roll with shares at $37.65. This was clearly a new position, as volume was well above the strike’s open interest of 2,962 contracts. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $8 this afternoon, more than 10 times their purchase price. The stock rose 24.8% in the same time period, showing 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 spiked higher by 13.78% to $46.17 today. The online-auction giant surpassed revenue expectations and announced that it will drop PayPal as its primary payment service.