$CS call buyers withdraw large gains

Bullish traders posted big profits in Credit Suisse today.

On Nov. 14, Investitute’s market scanners identified the purchase of 2,500 December $16 calls for $0.40 to $0.45 with shares at $15.90. These were clearly new positions, as open interest in the strike was only 166 contracts before the trades occurred.

Those calls sold for $1.25 today, more than 3 times their original purchase price. The stock rose 8.6 percent in the same time period, underscoring how options can far outperform their underlying shares. On Nov. 29, Investitute co-founder Pete Najarian named Credit Suisse as his final trade on CNBC’s “Fast Money” program after the name saw even more buying in June calls.

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.

CS was up 3.32 percent to $17.43 today. The Zurich-based firm rose along with other European banks this morning after significant progress was reported in Brexit negotiations.