$JD: The gift that keeps on giving

JD.com has seen bullish option activity for months, and traders profited in the name once again today.

On March 27, Investitute’s tracking systems detected the purchase of 6,000 18April $30.50 calls for $0.52 to $0.57 with shares at $29.21. This was clearly fresh buying, as open interest in the strike was only 294 contracts before that session began. Investitute co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for as much as $1.50 this afternoon, almost 3 times their purchase prices. The stock rose 7.87% at the same time, showing how quickly options can far outperform their underlying shares on a relative basis.

It is the second winning trade in the name posted on Investitute in the last three sessions and the sixth 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 was up 3.27% to $31.24 today. The Beijing-based e-commerce company topped quarterly expectations on Feb. 28 and has rallied more recently along with other Chinese names amid stronger economic data and reports of progress in trade negotiations.