$IDTI calls spike 4-fold on deal

Bullish option traders scored huge gains today on news that Integrated Device Technology is being acquired.

On Sept. 5, Investitute’s market scanners identified the purchase of 3,000 September $45 calls for $0.60 with shares at $42.87. There was no open interest in the strike before the trade occurred, showing that it was a new position.

Those calls traded up to $2.38 this morning, 4 times their purchase price. The stock rose 9.1% in the same time frame, underscoring how 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.

IDTI surged 10.65% to $46.56 today. Japan’s Renesas Electronics announced last night that it will buy the U.S. chip maker for $6.7 billion.