$MU call prices triple in hours

Option traders who opened bullish positions in Micron this morning were reaping exponential gains by the afternoon.

Half an hour after the opening bell, Investitute’s market scanners found that 5,500 Weekly $42 calls expiring on Nov. 23 were purchased for $0.09 to $0.18 with shares at $38.78. This was clearly fresh buying, as volume was far above the strike’s previous open interest of 1,207 contracts.

Those calls traded up to $0.42 by the end of the session, more than 3 times their average purchase price, as volume topped 8,500. The stock rose 3.46 at the same time, showing how quickly options can far outperform gains 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.

MU climbed 4.94% to $39.91 today. Quarterly results for the memory-chip maker are estimated to come out Dec. 19 after the market closes.