Option bulls score big in $PYPL

Option traders have scored big on upside positions opened in PayPal (PYPL) less than a month ago.

On Apr. 16, our Unusual Activity tracking systems showed that 5,000 May $110 calls were bought for $4.70 to $5.50 above open interest of 1,346 contracts with shares at $107.66.

Those calls traded for as much as $36.67 today, more than 6.5 times their purchase prices. The stock rose 36.21% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

PYPL ended up 14.01% at $146.29 this afternoon after missing top and bottom line earnings expectations after closing bell yesterday, although new active accounts grew by 10 million, excluding the acquisition of Honey.