$KRE call prices double

Bullish positions opened only a week and a half ago are returning big gains in the SPDR S&P Regional Banking Fund (KRE) today.

On Aug, 5, our Unusual Activity service detected the purchase of 8,300 Weekly $40 calls expiring today, Aug. 14, for $0.35 to $0.37 with shares at $38.00. This was clearly a new position, as open interest in the strike was only 6,698 contracts before that session began.

Those calls traded to a high of $0.95 today, more than 2.5 times their purchase prices. The stock rose 7.61% in the same time period, a large move but nowhere near that of its options.

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.

KRE ended today up 1.32% to $40.63. The exchange-traded fund, which tracks a basket of regional banks, has risen alongside the yield on the U.S. 10 Year Note.