$EWZ calls up 5-fold intraday

Bullish option positions opened in the iShares MSCI Brazil Fund this morning were already paying traders handsomely before the closing bell.

Just this morning, Investitute’s tracking systems detected the purchase of 4,400 Weekly $39 calls expiring on May 24 for $0.13 as part of a bullish roll with shares at $37.85. These were clearly new positions, as open interest in the strike was only 908 contracts before the trade occurred.

Those calls traded for $0.72 this afternoon, more than 5.5 times their purchase price. The stock rose 3.96% 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 $39.38 this afternoon and closed up 4.08% at $39.26 today. The exchange-traded-fund, which tracks a basket of Brazilian equities, has rebounded sharply in the last week.