$INTC call prices chip up overnight

Intel rocketed higher today, yielding substantial gains on upside option positions opened only the previous session.

Yesterday on Jan. 12, Market Rebellion’s Unusual Activity Service identified the purchase of 7,300 Weekly $58 calls, expiring on Jan. 29, for $0.69 to $0.82 with shares at $52.89. This was clearly fresh buying, as open interest in the strike was only 494 contracts before the activity appeared.

Those calls traded for as much as $4.13 today, better than 5 times their purchase prices. The stock rose 13.88% 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 ended the session with a gain of 6.97% at $56.95. The chip maker announced this morning that its CEO Bob Swan would be stepping down and that VMware  ($VMW) CEO Pat Gelsinger will replace him.