$FEYE bulls turn quick profits

It took less than a week for option traders to turn quick profits on upside positions in FireEye (FEYE).

On Jul. 27, Market Rebellion’s tracking systems found that 2,800 August $13 were bought for $0.79 to $0.91 with shares at $13.04. This was clearly fresh buying, as open interest in the strike was only 2,083 contracts before that session began.

Those calls have so far traded for as much as $2.50 this morning, more than 2.5 times their purchase prices. The stock rose 18.17% in the same time frame, 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.

FEYE is up 14.50% to $15.32 this morning. The cybersecurity company reported better than anticipated earnings after the market closed yesterday.