$BB call prices double overnight

BlackBerry ripped higher today, yielding quick returns for bullish option traders.

Just yesterday, Investitute’s tracking systems found that 2,000 Weekly $12 calls expiring on Feb. 2 were purchased for $0.24 and $0.25 with shares at $11.50. This was clearly fresh buying, as open interest in the strike was a mere 3 contracts before the activity appeared. Investitute co-founder Jon Najarian cited even more unusual activity in BlackBerry on CNBC’s “Halftime Report” at that time.

Those calls traded for $1.70 late this afternoon, 7 times their original purchase price. The stock surged 17.7 percent at the same time, showing how quickly options can far outpace gains in their underlying shares. It was the second winning trade in BB posted on Investitute in as many weeks.

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.

BB spiked higher by 12.56 percent to $13.53 today. The software maker, which had already rallied on strong quarterly results, surged again this morning after announcing a deal to develop self-driving car technology with Chinese search giant Baidu.