Teradyne calls pay huge returns

Bullish traders have turned exponential profits since Teradyne delivered strong quarterly results last month.

Back on Feb. 8, Investitute’s tracking systems detected the purchase of 6,000 July 31 calls for $1.25 to $1.35 with shares at $28.99. These were clearly new positions, as open interest in the strike was a mere 54 contracts before the trades occurred.

Those calls were listed at $4.20 today, more than tripling in value. The stock was up an impressive 20.2 percent in the same time period, but that paled in comparison to the gains in the 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.

TER was up 0.55 percent to $34.85 today. The chip-testing equipment company surged after beating earnings and revenue expectations on April 27.