$NFLX bulls double their money

Netflix has been ripping higher all year, returning huge profits on upside option positions.

On May 15, Investitute’s tracking systems detected the purchase of 10,000 December $270 calls for $72.80 as part of a bullish roll with shares at $324.81. Open interest in the strike was only 1 contract before the trade occurred, showing that this was a new position. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $138 today, nearly twice their purchase price. The stock rose 23.2% in the same time period, a large move but still far less than that of its options on a relative basis. Najarian updated his position today, rolling it to a higher strike in December.

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.

NFLX opened above $409 this morning but pulled back to close at $395.80, down 4.28% on the session. The video-streaming giant has received several analyst upgrades recently, with price targets raised to $500.