$INTC bulls double money

Large option positions opened in Intel (INTC) barely a week ago are paying off big today.

On Sept. 4, our tracking systems detected bullish activity in the same strike in two trades in complex spreads just minutes apart. Market Rebellion co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report“:

—8,000 November $49 calls were purchased for $2.11 to $2.16 above open interest of 2,003 contracts with shares at $48.18
—5,000 November $49 calls were bought for $2.25 above open interest of 2,003 contracts with shares at $48.37.

Those calls traded for as much as $5 today, about 2.5 times their initial purchase price. The stock rose 9.8% in the same time frame, showing how quickly options can far outperform moves in 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.

INTC reached a session high of $52.99 early this morning but has pulled back to $52.52 in afternoon trading, off 0.92% on the day. The chip maker has rallied sharply since rebounding off multi-month lows in late August.