$OKTA calls double overnight

Option traders turned quick profits today from bullish positions opened in OKTA only one session earlier.

Just yesterday, Investitute’s tracking systems detected the purchase of 5,400 December $50 calls bought for $2.50 to $4.80 with shares at $48.77. This was clearly fresh buying, as volume was well above the strike’s previous open interest of 2,555 contracts. Investitute co-founder Jon Najarian cited the unusual activity at that time and updated the trade today on CNBC’s “Halftime Report.”

Those calls traded up to $7 this afternoon, twice their average purchase price. The stock rose 8.2% at the same time, showing how options can quickly 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.

OKTA surged 8.09% to $51.69 today after rebounding from long-term support highlighted by Najarian yesterday. The security-software company is scheduled to report earnings after the market closes on Dec. 5.