$KWEB bulls score a winner

Bullish option traders have scored a winner in upside positions on the KraneShares CSI China Internet ETF (KWEB) today.

On Dec. 2, Market Rebellion’s tracking systems detected the purchase of 2,000 January $49.74 calls for $0.56 to $0.58 as part of a bullish roll with shares at $46.47. These were clearly new positions as open interest in the strike was only 362 contracts before the activity appeared.

Those calls have traded for as much as $2.50 so far today, or nearly 5 times their purchase prices. The stock rose 12.24% in the same time frame, illustrating the kind of leverage that can be achieved with options.

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.

KWEB is currently higher by 1.06% at $52.45 on the day. The exchange-traded fund, which tracks a basket of Chinese internet equities, has risen to a new 52-Week high today.