$INTC bulls double their money

Intel has rebounded in the last week, yielding substantial gains on upside option positions.

On Sept. 17, Investitute’s tracking systems showed that 9,000 Weekly $46 calls expiring on Nov. 2 were purchased for $1.60 as part of a bullish spread with shares at $45.27. Open interest in the strike was a mere 14 contracts before the trade occurred, showing that it was a new position. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $3.20 today, twice their purchase price. The stock rose 6.6% 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.

INTC reached $48.86 right after the open but pulled back with the rest of the market and closed at $48.13, off 1.29% on the session. The chip maker rallied after announcing on Sept. 28 that it will meet its full-year revenue forecast.