$FEYE calls spike 7-fold overnight

FireEye bounced sharply this week, handing large gains to bullish option trades opened only 24 hours earlier.

Just yesterday, Investitute’s proprietary programs showed that 1,600 Weekly $18 calls expiring tomorrow were purchased for $0.10 to $0.25 with shares at $17.71. Volume was well above the strike’s open interest of 1,030 contracts, indicating that this was fresh buying.

Those calls traded as high as $0.74 today, more than 7 times their initial purchase price. The stock rose 5.6% at the same time, 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 was up 3.59% to close at $18.75 today, just shy of its 52-week high of $18.84 reached a month ago. The cybersecurity company is scheduled to announce quarterly results on May 2 after the market closes.