$MOMO gets its mojo back

Bullish option traders have more than doubled their money in Chinese tech company Momo.

On March 1, Investitute’s market scanners identified the purchase of 2,600 18April $35 calls for $2.40 to $2.50 with shares at $34.06. Volume was well above the strike’s previous open interest of 2,065 contracts, indicating that this was fresh buying.

Those calls traded for as much as $5.50 today, more than twice their purchase prices. The stock rose 17.18% in the same time frame, underscoring how options can far outperform moves in 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.

MOMO, which began the year by hitting a 52-week low of $22.85, was up 0.24% to $178.45 today. The Beijing-based mobile social and entertainment platform beat earnings and revenue estimates on March 12.