How $AAPL calls increased fivefold

Apple rallied on strong quarterly numbers today, handing exponential gains to bullish option traders.

On Oct. 27, Investitute’s market scanners found that 2,000 Weekly $172.50 calls expiring on Dec. 1 were purchased at the same time for $0.85 to $0.90 with shares at $159.67. This was clearly a new position, as open interest in the strike was only 604 contracts before the activity appeared.

Those calls traded as high as $4.30 this morning, 5 times its original purchase price. The stock rose 8.8 percent in the same time frame, showing how quickly options can far outpace 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.

AAPL was up 2.61 percent to $172.50 at the end of today’s session. The iPhone maker beat earnings and revenue estimates after the market closed yesterday, prompting CEO Tim Cook to predict that the next quarter would be the company’s best ever.