$MAT calls up 10-fold in a day

Option traders logged huge profits today on bullish positions opened in Mattel (MAT) only one session earlier.

Just yesterday, Market Rebellion’s market scanners found that 4,000 Weekly $11.50 calls expiring this Friday were bought for $0.15 to $0.20 with shares at $10.20. These were clearly new positions, as open interest in the strike was a mere 249 contracts before the activity appeared.

Those calls have traded for as much as $1.70 so far today, about 10 times their average purchase price. The stock rose 29.41% at the same time, a large move but nowhere near that of its 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.

MAT is up 18.37% to $12.50 in early trading. The heavily shorted toy maker beat quarterly expectations on the top and bottom lines after the market closed yesterday.