$EEM calls ring up more profits

Bullish traders quintupled their money on options purchased in the iShares MSCI Emerging Markets Fund just a few weeks ago.

On Jan. 3, Investitute’s market scanners found that 9,473 Weekly $49 calls expiring on Feb. 2 were purchased in one print for $0.49 with shares at $48.33. Open interest in the strike was only 133 contracts before the trade occurred, showing that it was a new position.

Those calls traded for $2.74 today, more than 5.5 times their purchase price. The stock rose 6.5% in the same time frame. Showing how options can far outperform their underlying shares.

It is the second winning EEM trade posted on Investitute in as many days. Investitute co-founder Pete Najarian cited the purchase of even more EEM calls at the April $51 strike on CNBC’s “Halftime Report” yesterday.

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.

EEM was up 0.84% to $51.40 today. The exchange-traded fund has rallied in the last month as the global recovery has taken hold.