$FIT bulls score again

Option traders posted exponential gains today on two bullish positions opened in Fitbit (FIT) earlier this week.

On Oct. 28, Market Rebellion’s tracking systems detected the purchase of 4,800 Weekly $4.50 calls, expiring on November 8, for $0.52 to $0.66 with shares at $4.53. This was clearly fresh buying, as volume was clearly above the strike’s previous open interest of 3,523 contracts.

And on Oct. 29, Market Rebellion’s tracking systems detected the purchase of 25,000 Weekly $6 calls, also expiring on November 8, for $0.48 as part of a bullish spread with shares at $5.69. Volume dwarfed the strike’s previous open interest of 1,196 contracts, indicating that this too was a new position.

Those $4.50 calls have traded for as much as $2.75 today, more than 4 times their purchase prices, while the $6 calls have traded for $1.41, nearly 3 times their purchase price. The stock has risen as much as 59.8% in the same time frame, a large move but nowhere near that of its options on a relative basis.

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.

FIT has spiked higher by 15.94% to $7.16 today. The fitness-device maker announced this morning that it has entered into an agreement with Alphabet (GOOG/GOOGL) to be acquired for $7.35 per share in cash, following an earlier report in the week from Reuters on Alphabet’s approach that sent Fitbit calls soaring.