Option bulls post profits in $FB

Option traders are posting large profits today on bullish positions opened in Facebook (FB) last week.

On Jan. 15, Market Rebellion’s Unusual Activity scanners found that 6,200 Weekly $255 calls expiring tomorrow, Jan. 22, were bought for $2.97 to $4.35 with shares at $247.62. The volume was well above the contract’s previous open interest of 4,480 which indicated that this was a new position.

Those calls have traded up to $18.36 today, at least 4 times their purchase prices. The stock rose 10.35% at the same time, showing how quickly 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.

FB was last up 1.67% at $271.94 this afternoon. The social media and technology company is scheduled to report earnings after the closing bell on Jan. 27 and saw its price target raised to $355 from $320 at Evercore ISI this morning.