$EWZ calls double

Bullish option positions opened in the iShares MSCI Brazil Fund (EWZ) Tuesday morning were already paying traders handsomely before the closing bell today.

On May 19, Market Rebellion’s Unusual Activity systems detected the purchase of 33,000 Weekly $25 calls expiring on May 29, as part of a bullish spread for $0.22 with shares at $23.51. Volume was well above the strike’s previous open interest of just 2,099 contracts, indicating that this was a new position.

Those calls traded for $0.56 this afternoon, more than double their purchase price. The stock rose 5.61% 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 moved up to a high of $24.87 mid session and closed lower by 0.56% at $24.66 today. The exchange-traded-fund, which tracks a basket of Brazilian equities, rebounded sharply this week near the highs of its recent trading range.