Call prices soar 5-fold in $BB

BlackBerry (BB) surged today, yielding large returns on upside option positions opened in the middle of last week.

On Jan. 20, our Unusual Activity scanners identified the purchase of 3,700 Weekly $14 calls expiring this Friday, Jan. 29, for $1.10 to $1.35 above open interest of just 615 contracts with shares at $13.13.

Those calls traded up to $7.40 today, more than 5 times their purchase prices. The stock rose 56.44% at the same time, showing how options can quickly outperform their underlying shares by a wide margin.

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 to a new 52-Week high of $20.83 today and at the close was up 28.42% at $18.03. The communications-software company has seen its shares climb sharply this year-to-date.