$ITUB call prices skyrocket 11-fold

Brazilian stocks have been en fuego recently, and traders are posting enormous gains on Itau Unibanco.

On Jan. 2, Investitute’s market scanners identified the purchase of 10,900 February $14 calls for $0.25 with shares at $13.39. This was clearly fresh buying, as open interest in the strike was only 350 contracts before the trade occurred.

Those calls were marked at $2.75 this afternoon, 11 times their original purchase price. The stock rose 24.8% in the same time frame, a large move but nowhere near that of its options.

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.

ITUB was up 2.61% to $16.52 today. The Brazilian bank, which has rallied with other Latin American stocks, will report earnings on Feb. 6.