$NXPI bulls turn quick profits

It took barely a week for option traders to double their money in NXP Semiconductor.

On May 4, Investitute’s tracking systems cited the purchase of 15,000 January $105 calls for $8.40 to $9 as part of a bullish spread with shares at $94.79. This was clearly a new position, as open interest in the strike was only 3,410 contracts before the activity appeared.

Those calls traded up to $16.10 today, twice their initial purchase price. The stock rose 18.2% in the same time frame, showing how options can far outperform 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.

NXPI jumped 11.85% today. The chip maker rallied amid signs that trade tensions may be easing between the United States and China, which has blocked the company’s sale to Qualcomm.