$IQ call prices triple in a day

It took just 24 hours for option traders to post large gains in Chinese company iQIYI (IQ).

Just yesterday, Investitute’s tracking systems detected the purchase of 4,000 July $21 calls for $0.23 to $0.37 with shares at $19.13. This clearly fresh buying, as open interest in the strike was only 805 contracts before the activity appeared.

Those calls traded up to $1.11 today, more than 3.5 times their average purchase price. The stock rose 10.3% 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.

IQ is up 3.49% to $20.73 heading into today’s final hour of trading. The Beijing-based online-video service has rallied apparently on hopes of positive developments ahead of U.S.-China trade talks at the G-20 summit.