$JPM calls turn fast gains

Option traders are riding bullish momentum in JP Morgan (JPM) to gains today.

On Jan. 13, Market Rebellion’s Unusual Activity programs flagged the purchase of 10,000 January $247.50 calls for $2.55 to $2.58 with shares at $243.08. This was clearly fresh buying, as volume was clearly above the strike’s previous open interest of 1,871 contracts.

Those calls have traded for as much as $9.00 so far today, a 248.84% return, while the stock rose 5.46% in the same time frame, illustrating how quickly options can far outperform their underlying calls.

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.

JPM was last trading at $254.70, up 0.93% on the session.