$ETSY bulls quadruple their money

Strong quarterly numbers from Etsy translated to big profits for option traders today.

On Feb. 1, Investitute’s market scanners identified the purchase of 5,000 June $22.50 calls for $1.15 as part of a bullish spread with shares at $19.15. This was clearly a new positions, as open interest in the strike was only 453 contracts before the trade occurred.

Those calls traded up to $4.90 this morning, more than 4 times their purchase price. The stock rallied 37% in the same time frame, a large move but one that was still far below that of its options on a relative basis.

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.

ETSY spiked higher by 20.35% to $25.31 today. The online crafts marketplace blew past fourth-quarter estimates after the market closed yesterday.