Calls spike higher as Nutanix rallies

Nutanix surged with a high-profile upgrade from Goldman Sachs today, sending bullish option positions flying.

On June 23, Investitute’s market scanners detected the purchase of 2,100 July $22.50 calls for $0.15 to $0.30 with shares at $19.25. Volume was above the strike’s open interest of 1,821 contracts, indicating that this was fresh buying.

Today those calls traded up to $0.65, nearly tripling in value. The stock rose 15.6 percent in the same time frame, illustrating the kind of leverage that can be obtained through options.

Long calls lock in the price where the 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.

NTNX jumped 9.13 percent today to close at $22.13. Goldman Sachs upgraded the name to its “Conviction Buy” list with a $31 price target, citing the cloud-computing company as a potential M&A candidate and a “once-in-a-decade tech infrastructure story.”