$FIT calls quadruple in a day

Option traders posted huge gains today on bullish positions opened in Fitbit (FIT) only one session earlier.

On Oct. 25, Market Rebellion’s tracking systems detected the purchase of 5,100 December $5 calls for $0.42 to $0.47 with shares at $4.39. This was clearly fresh buying, as volume was far above the strike’s previous open interest of 2,640 contracts.

Those calls traded for as much as $2 today, more than 4 times their purchase prices. The stock rose 26.2% 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 spiked 30.86% to $5.64 today. Shares surged after Reuters reported that Alphabet (GOOG/GOOGL) has made an offer to purchase the fitness-device maker.