Bulls quadruple their money in $AMZN

Option traders posted huge profits today after Amazon.com blew past earnings forecasts.

On Aug. 30, Investitute’s proprietary programs cited the purchase of 4,700 November $1,100 calls for $6.70 to $7.30 with shares at $962.11. These were clearly new positions, as open interest in the strike was only 643 contracts before the activity appeared.

Those calls traded for $27.80 today, more than 4 times their original purchase price. The stock rose 14.8 percent in the same time frame, showing how options can far outperform moves 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.

AMZN surged 13.22 percent to close at $1,100.95 today. The e-commerce behemoth reached a lifetime high of 1,105.58 earlier in the session after crushing quarterly estimates last night.