Ameritrade bulls triple their money

Upside option positions in TD Ameritrade have seen exponential gains.

On May 19, Investitute’s tracking systems detected the purchase of 2,500 August $38 calls for $1.40 to $1.50 with shares at $36.77. Open interest in the strike was only 433 contracts before the trade occurred, showing that it was a new position.

Those calls traded for $4.70 today, more than tripling in value. The stock is up about 15.3 percent in the same period, underscoring how far options can 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.

AMTD rose 2.6 percent to $42.29 today. The online brokerage has rallied sharply since breaking above its 50-day moving average on June 8.