Bulls triple their money in $AMAT

Upside option traders turned made big money today on strong quarterly results by Applied Materials

On Oct. 12, Investitute’s tracking systems detected the purchase of 5,300 November $57.50 calls mostly in one print for $1.02 with shares at $53.79. Volume was far above the strike’s open interest of 1,012 contracts, showing that this was fresh buying. It was one of three bullish AMAT trades posted in the same session on our proprietary Activity Log.

Those calls traded up to $3.20 this morning, more than 3 times their purchase price. The stock rose less than 13 percent in the same time period, illustrating the kind of leverage that can be achieved through options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

AMAT spiked to a record high of $60.89 this morning before pulling back to close at $56.49, off 2.33 percent. The chip-equipment maker revised its outlook higher after beating estimates on the top and bottom lines last night.