Calls turn quick profits in $TWTR

It took less than four sessions for bullish option traders to double their money in Twitter.

Last Wednesday, Investitute’s trading systems showed that 5,500 Weekly $21.50 calls expiring Dec. 22 were purchased for $0.42 to $0.60 with shares at $21.33. These were clearly new positions, as open interest in the strike was only 275 contracts before the trades occurred.

Those calls sold for $1 this afternoon, more than doubling their original purchase price. The stock rose 4 percent in the same time frame, illustrating the type of leverage that can be obtained 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.

TWTR jumped 4.5 percent to $22.05 today. The social-media name reached a $22.20 in the final hour of trading, approaching its 52-week high of $22.48.