$MSFT bulls double money

Bullish option traders are being rewarded today with big profits on upside positions in Microsoft (MSFT) as it sets a new record high.

On Dec. 16, Market Rebellion’s Unusual Activity scanners identified the purchase of 3,400 February $240 calls for $2.86 to $3.60 with shares at $217.35. This was clearly a new position, as volume was clearly above the strike’s previous open interest of 4,745 contracts.

Market Rebellion co-founder Jon Najarian cited the activity that day on CNBC’s “Halftime Report.”

Those calls traded for as much as $8.00 during this session, at least double their purchase prices. The stock rose 12.76% in the same time frame, showing how options can far outperform their underlying shares on a relative basis.

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.

MSFT at the close was at $243.00, up 1.46% on the session just below its new all-time-high of $245.09 made earlier. The software giant’s shares have been on the rise since topping earnings expectations on Jan. 26.