$GOOG calls post huge profits

Patience has paid off in a big way for a large bullish trade in Google that was opened last fall.

Back on Oct. 27, Investitute’s tracking systems detected the purchase of 5,293 March $1,035 calls for $60 as part of a bullish spread with shares at $1,041. Open interest in the strike was a mere 4 contracts before the trade occurred, showing that it was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report,” noting the large dollar amount in that trade.

Those calls traded as high as $122.97 today, more than doubling their purchase price. The stock rose 11.3% in the same time period, illustrating th ekind of leverage that can be achieved through options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

GOOG rallied 3.02% to $1,160.04 today. As one of the large-cap tech names that have led the market’s rebound, the search giant has erased all its losses since the correction began in early February.