Bulls post 14-fold gains in $FEYE

Option traders made a killing on upside positions opened in FireEye (FEYE) only two session ago.

On Sept. 30, Market Rebellion’s tracking systems found that 3,700 Weekly $13.50 calls expiring this Friday were bought for $0.06 to $0.10 with shares at $13.20. This was clearly fresh buying, as open interest in the strike waas only 812 contracts before the activity appeared.

Those calls traded for as much as $1.10 this afternoon, about 14 times their average purchase price. The stock rose 10.98% in the same time frame, underscoring 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 4.84% to $13.86 in afternoon trading. Shares rallied after Business Insider reported today that the cybersecurity company had retained Goldman Sachs for a potential sale.

(Disclosure: I own FEYE calls.)