$HPQ bulls double their money

Option traders are printing big gains on upside positions in HP (HPQ) today.

On Feb. 11, Market Rebellion’s Unusual Activity Service found that 6,000 Weekly $22.50 calls expiring on March 13 were bought for $0.60 as part of a bullish roll with shares at $22.14. This was clearly a new position, as open interest in the strike was a mere 66 contracts before that session began.

Those calls have traded for as much as $1.26 so far today, more than twice their purchase price. The stock rose 6.19% in the same time frame, illustrating the kind of leverage that can be achieved with 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.

HP is up 5.88% to $23.40 this morning. The computer maker, which is fighting a $35 billion takeover offer from Xerox (XRX), beat earnings estimates while announcing new measures to cut costs and repurchase its stock.