$IBM call buyers score at highs

Bullish option positions opened last year in IBM (IBM) are paying off.

On Sep. 12, Market Rebellion’s Unusual Activity Service detected the purchase of 3,440 March $200 calls for $20.35 to $21.03 with shares at $209.73. Open interest in the strike before the trade occurred was just 1,658 contracts, showing that this was a new position.

Those calls traded for as much as $61.67 today, a 193.25% return, while the stock rose 24.42% at the same time, underscoring how quickly options can far outperform their underlying shares.

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.

IBM was last trading higher on the day by 12.20% to $256.69.