Option bulls score with $FB at highs

Option traders are posting large gains today on bullish positions opened in Facebook (FB) a couple of sessions ago.

On Apr. 5, Market Rebellion’s Unusual Options Activity service found that 10,200 Weekly $305 calls expiring this Friday, Apr. 9, were bought for $2.75 to $4.45 with shares at $300.91. The volume was well above the contract’s previous open interest of 4,717 which indicated that this was a new position.

Those calls have traded up to $9.75 today, at least double their purchase prices. The stock rose 4.4% at the same time, showing how quickly options can far outperform their underlying shares.

This marks the third winning trade in the name to be posted on Market Rebellion in the past week.

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 2.12% at $312.76  in late afternoon trade, setting new highs this session.