$EBAY call prices double overnight

Bullish option positions opened in eBay yesterday turned significant gains just 24 hours later.

Just yesterday, Investitute’s market scanners identified the purchase of 4,600 February $38 calls for $0.74 to $0.80 with shares at $35.64. Volume was more than double the strike’s open interest of 2,005 contracts, showing that this was fresh buying.

Those calls traded for $1.30 today, almost twice their original purchase price. The stock rose 4.2 percent at the same time, illustrating the kind of leverage that can be achieved 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.

EBAY was up 3.11 percent today to close at $36.81. Yesterday BMO Capital upgraded the online-auction giant to “outperform” from “market perform: and raised its price target to $45 from $40, citing 2018 growth estimates. Investitute co-founder Pete Najarian mentioned mentioned the upgrade on CNBC’s “Halftime Report” yesterday and said he was bullish on the name.