Bullish option traders doubled their money today as Palo Alto Networks rallied on strong quarterly results.
On Nov. 10, Investitute’s market scanners found that 1,220 Weekly $141 calls expiring this Friday were purchased for $6.72 as part of a bullish spread with shares at $140.65. This was clearly a new position, as open interest in the strike was a mere 11 contracts before the trade occurred.
Today those calls traded for $15.50, more than double their purchase price. The stock rose 11 percent in the same time frame, 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.
PANW finished up 4.82 percent at $149.40 after spiking to $156.85 this morning. The cybersecurity company beat estimates on the top and bottom lines after the market closed yesterday.