$EWZ bulls score big overnight

Bullish option positions opened yesterday in the iShares MSCI Brazil Fund were already yielding significant gains by this afternoon.

Just yesterday, Investitute’s tracking systems detected the purchase of 75,000 July $43 calls bought in one print for $0.64 with shares at $39.89. This was clearly a new position, as open interest in the strike was only 2,218 contracts before that session began. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report” yesterday.

Those calls traded up to $1.37 today, more than twice their initial purchase price. The stock rose 5.2% at the same time, illustrating how quickly options can far outpace moves in 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 was up 3.21% to close at $41.78 today. The exchange-traded fund, which tracks an index of Brazilian equities, outperformed with a weaker dollar and a heavy weighting in materials and energy.