$MSFT bulls triple their money

It took just one week for option traders to collect large profits on upside positions in Microsoft (MSFT).

On Sept. 12, our tracking systems detected the purchase of 6,500 September $142 calls for $0.28 to $0.34 above open interest of 3,923 contracts with shares at $137.46. Market Rebellion co-founder Pete Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls sold for as much as $0.93 today, 3 times their average purchase price. The stock rose 3.56% in the same time frame, underscoring how quickly options can far outperform their underlying calls.

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 is up 2.02% to $141.32 this morning. The software giant announced a $40 billion stock-repurchase program before the market opened.

<i>Disclosure: I am long MSFT.</i>