Calls spike in Palo Alto Networks

Option traders tripled their money in Palo Alto Networks on strong quarterly results today.

On March 31, Investitute’s proprietary programs detected the purchase of 2,000 June $110 calls for $8.79 with shares at $112.83. This was clearly a new position, as open interest in the strike was just 375 contracts before the trade occurred.

Those calls went for $29.90 this morning, gaining more than 240 percent. The stock rose 24 percent in the same time frame, underscoring the kind of leverage that can be achieved 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.

PANW jumped 17.2 percent today to close at $138.99. The cybersecurity company gapped up from below $119 at the open after beating earnings and revenue estimates yesterday evening.