$FB call prices soar

Option traders are posting large profits today on bullish positions opened in Facebook (FB) just over one week ago.

On Apr. 22, Market Rebellion’s Unusual Activity scanners found that 7,000 Weekly $195 calls expiring tomorrow, Friday, May 1, were bought for $2.14 to $2.78 with shares at $179.69. The volume was well above the contract’s previous open interest of 1,608 which indicated that this was a new position.

Those calls have already traded up to $14.68 so far today, more than 5 times their purchase prices. The stock rose 16.62% at the same time, showing how quickly 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.

FB was last up 4.53% to $213.98 this afternoon, after trading as high as $209.69 earlier in the session. The social media and technology company reported earnings after the closing bell yesterday, citing an increase in daily active users of 11% year-on-year.