$EIX call prices quadruple overnight

Upside option positions turned quick profits today as Edison International held its ground after sharply losses this week.

Just yesterday, Investitute’s proprietary programs cited the purchase of 3,800 December $70 calls for $0.95 to $2.05 with shares at $70.47. These were clearly new positions, as open interest in the strike was only 536 contracts before the activity appeared.

Those calls traded to $3.99 today, more than 4 times their original purchase price. The stock rose less than 4 percent at the same time, showing how quickly options can far outpace gains in their underlying shares.

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.

EIX spiked to $73.31 this morning before pulling back to end the day up 0.04% at $71.80. The power company had rebounded after plunging 16 percent on Wednesday amid speculation that subsidiary Southern California Edison might be held liable for some of the damage from the region’s massive wildfires.