$LPLA bulls double money

Option traders are logging big gains on upside positions in LPL Financial (LPLA).

On Aug. 13, Market Rebellion’s market scanners identified the purchase of 8,790 December $80 calls for $3.40 with shares at $74.93. Open interest inthe strike was a mere 41 contracts before the trade occurred, showing that this was a new position.

Those calls are marked at $7.85 today, more than twice their purchase price. The stock rose 15.61% in the same time period, illustrating how options can far outperform their underlying shares.

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.

LPLA traded up to $87.46 a few minutes after the opening bell but has pulled back to $86.85 in early trade, off 0.56%. The investment service is up sharply, along with many other financial names, since reporting earnings on Oct. 24.