$JD calls score big in hours

Option traders who opened bullish positions in JD.com this morning had doubled their money by the afternoon.

About 90 minutes into today’s session, Investitute’s tracking systems found that 2,900 Weekly $29.50 calls expiring on May 24 were bought for $0.44 to $0.51 with shares at $28.63. Volume was well above the strike’s existing open interest of 2,144 contracts, indicating that this was fresh buying.

Those calls traded for as much as $1.04 by only hours later, more than twice their average purchase price. The stock rose 4.02% at the same time, showing how quickly options can far outpace gains in their underlying shares.

It is the second winning trade in the name posted on Investitute in the last three sessions.

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.

JD jumped 5.29% to $29.67 today. The Beijing-based e-commerce company reported strong quarterly results on May 10 but then pulled back this week along with other Chinese names amid growing trade tensions.