$JD calls turn quick profits

It took barely a week for option traders to double their money in JD.com

On March 26, Investitute’s proprietary programs showed that 5,000 Weekly $29.50 calls expiring on May 3 were bought for $1.07 as part of a bullish roll with shares at $28.84. This was clearly a new position, as open interest in the strike was a mere 3 contracts before the trade occurred. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for as much as $2.01 today, about twice their purchase price. The stock rose 6.66% in the same time frame, illustrating the kind of leverage that can be achieved with options.

It is the second winning trade in the name posted on Investitute in the last four sessions and the fifth winning position since the end of February.

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.

JD climbed to a session high of $30.93 before pulling back to close at $30.31, up 0.07% on the day. The Beijing-based e-commerce company has rallied along with other Chinese names with strong economic data and reported progress in trade negotiations.