$IAC bulls quadruple their money

IAC/InterActiveCorp yielded huge returns on upside option positions today, thanks to strong quarterly results.

On July 5, Investitute’s tracking systems detected the purchase of 2,000 August $155 calls for $6.79 and $6.80 as part of a bullish spread with shares at $153.44. This was clearly a new position, as open interest in the strike was only 23 contracts before the trade occurred.

Those calls traded up to $28.60 this afternoon, more than 4 times their purchase prices. The stock rose 19.58% in the same time period, 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.

IAC jumped 8.72% to $182.60 today. The media company topped estimates on the top and bottom lines after the market closed yesterday.