$NFLX bulls watch their call prices double

Netflix has risen sharply since making a fresh 52-Week low, handing substantial gains to bullish option positions.

On Dec. 27, Investitute’s tracking systems detected the purchase of 3,800 Weekly $270 calls expiring on January 4 from $2.65 to $3.45 with shares at $249.11. Open interest in the strike was only 839 contracts before the trade occurred, showing that this was a new position.

Those calls sold for as much as $7.21 today, more than twice their purchase price. The stock rose 8.39% in the same time period, a large move but still far less than that of its options 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.

NFLX traded to an intraday high of $270.10 this afternoon but pulled back to close at $267.66, still up 4.52% on the session. The video-streaming giant closed higher for the fourth day in a row after bottoming at a new 52-Week low of $231.23 on Dec. 26.