$EWZ bulls double money again

Bullish option positions opened in the iShares MSCI Brazil Fund in the middle of this month paid off handsomely today as shares gapped higher.

On Jan. 17, Investitute’s tracking systems found that 10,000 February $41 calls were purchased as part of a bullish spread for $2.35 with shares at $42.44. This was clearly a new position, as volume was well above the strike’s open interest of 7,806 contracts before the trade occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report”

Those calls sold for $4.79 today, more than double their purchase price. The stock rose 7.49% 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.

EWZ rose 1.73% to close at $45.37 today. The exchange-traded-fund, which tracks a basket of Brazilian equities, has continued its rise off of a technical double bottom made during the third quarter of last year.