$EWZ call prices double

Bullish option positions opened in the iShares MSCI Brazil Fund in the middle of this week paid off today.

On Mar. 27, Investitute’s tracking systems detected the purchase of 8,000 Weekly $41.50 calls expiring today for $0.15 to $0.19 with shares at $40.38. These were clearly new positions, as open interest in the strike was only 4,419 contracts before the trade occurred. Investitute co-founder Pete Najarian cited the activity at the time on CNBC’s “Halftime Report.”

Those calls traded for $0.35 today, double their average purchase price. The stock rose 3.17% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

EWZ rallied to a high of $41.66 this morning before pulling back to close up 0.76% to $40.99 today. The exchange-traded-fund, which tracks a basket of Brazilian equities, rebounded sharply after a steep drop over the past two weeks.